FRANKFURT, Germany — The setup of the 17-country euro currency union is unsustainable, the head of the European Central Bank has told EU leaders, warning they must quickly come up with a broad vision for the future to get the bloc through the current financial crisis.
Mario Draghi said Thursday that the crisis had exposed the inadequacy of the financial and economic framework set up for the euro monetary union launched in 1999.
"That configuration that we had with us by and large for 10 years which was considered sustainable, I should add, in a perhaps myopic way, has been shown to be unsustainable unless further steps are taken," he said in response to questions in the European Parliament.
Draghi said the central bank had done what it could to fight the 2½-year debt crisis by reducing interest rates and giving $1.2 trillion in emergency loans to banks. But it was now up to governments to chart a course by reducing deficits, carrying out sweeping reforms to spur growth and by strengthening the euro's basic institutions. The ECB cannot "fill the vacuum of the lack of action by national governments" in those areas.
He said the next step "is for our leaders to clarify what is the vision ... what is the euro going to look like a certain number of years from now. The sooner this has been specified, the better it is."
In 1989, for example, European Commission President Jacques Delors presented a landmark report that charted the initial path to the creation and launch of the euro a decade later and laid out the goals to be achieved. "The same thing should be done now," Draghi said.
He likened Europe's current struggles to a person crossing a river in fog against strong current.
"He or she continues fighting but does not see the other side because it is foggy. What we are asking is, to dispel this fog," he said.
The euro was set up as a single currency with one central bank, the ECB, to issue the currency and set interest rates. But the different national governments continued to independently determine their budgets and manage their widely different economies.