Saturday

19th Jan 2019

Citigroup says only 'United States of Europe' will save euro

  • Investors are warning of threats to the European currency even if the Greek crisis is resolved (Photo: pimousse3000)

A Citigroup note to clients has warned that the eurozone is likely to fall apart unless the European Union's member states fuse both on the fiscal and political level.

"Europe needs to stand up and decide if it is going to be a ‘United States of Europe' or a ‘patchwork quilt' of independent states," reads a note by Tom Fitzpatrick, chief technical analyst at Citigroup in New York, first seen by Bloomberg.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

The financial services firm, the largest in the world and one of America's big four banks, says that if such integration is not on the cards, the euro area is "doomed" even if the current Greek crisis is resolved.

"Without a preparedness amongst the major nations - Germany in particular - to head in this direction, we fear that the euro as a common and expanding single currency will inevitably be doomed," the analysis continued.

In February this year, hedge fund wizard George Soros also warned the eurozone was bound to break up without fiscal union.

"A makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large of a portion of the Euroland to he helped in this way…The survival of Greece would still leave the future of the Euro in question," he told the Financial Times.

"The construction is patently flawed. A fully fledged currency requires both a central bank and a treasury. The treasury need not be used to tax citizens on an everyday basis, but it needs to be available in times of crisis," he said. "When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a treasury can deal with problems of solvency."

"This is a well-known fact that should have been clear to everyone involved in the creation of the euro."

The euro has slid 6.1 percent against the US dollar this year.

Spectre of fresh EU treaty returns to haunt ‘incomplete’ Europe

So exhausted were they by the struggle by the time the soap opera ended, European leaders then swore it would be very long indeed, perhaps a generation, before the EU treaties would be opened again. But now, in the last few days, as Europe’s economy and the single currency stand on the precipice, these same leaders have begun to eat their words.

EU bleeding untold billions to fraud

Over €6bn of EU taxpayers' money was stolen by criminals in recent years and over €130m is still being lost each year, EU auditors said.

ECB takes over ailing Italian bank

Decades of mismanagement appear to have caught up with Italy's Carige bank as the European Central Bank takes control in a move to stave off another banking crisis.

Analysis

China's 2019 growth outlook

As China's growth seems to be slowing, some observers see the country amid what the New York Times called a "severe downturn". As they mistake China's secular deceleration with cyclical fluctuations, they miss the rapid increase in Chinese living standards.

Exclusive

Fines for dangerous ski lifts vary widely across EU

Failure to comply with EU safety requirements for ski lifts is punished very differently across EU member states - posing a problem for the sector, as unscrupulous firms could set themselves up in states where fines are the lowest.

News in Brief

  1. EU trade commissioner asks for green light for US talks
  2. Slovakia's commissioner takes unpaid leave to run for presidency
  3. Minority elects Lofven as prime minister of Sweden
  4. Putin opposes EU prospects of Serbia and Kosovo
  5. Tsipras launches campaign to ratify Macedonia deal
  6. US-EU meeting in doubt after Trump cancels plane
  7. Germany and China to sign pact on finance cooperation
  8. Labour divided on second Brexit vote plan

Stakeholders' Highlights

  1. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  2. Nordic Council of MinistersSeminar on disability and user involvement
  3. Nordic Council of MinistersInternational appetite for Nordic food policies
  4. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  5. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  6. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  7. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  8. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  9. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  10. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  11. Nordic Council of MinistersThe Nordic gender effect goes international
  12. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General

Latest News

  1. Aachen treaty and Brexit endgame This WEEK
  2. Germany led way on EU rights protection
  3. How to troll the European Parliament elections
  4. MEPs in Strasbourg: everywhere but the plenary
  5. Brexit delay 'reasonable', as May tries cross-party talks
  6. MEPs allow Draghi's membership of secretive bank group
  7. EU parliament backs Morocco deal despite row
  8. Barnier open to 'future relations' talks if UK red lines shift

Join EUobserver

Support quality EU news

Join us