London, Apr 27, 2012 - (ACN Newswire) - "The eurozone crisis has led to a revolution of European fiscal federalism and the dismantling of fundamental pillars in the fiscal constitution," says Dr. Friedrich Heinemann, Head of the Department for Corporate Taxation & Public Finance, Centre for European Economic Research (ZEW). We must figure out how to gain back investor confidence.
A speaker at the upcoming marcus evans European Pensions & Investments Summit 2012, Noordwijk aan Zee, The Netherlands, 14 - 16 May, Heinemann discussesGermany's role in the debt crisis and risk management strategies for eurozone members.
- What is Germany's role in the current eurozone crisis?
We are in the middle of a comprehensive crisis of trust. There is increasing doubt and industrial countries will have to bear the burden of public debt. This lack of confidence is feeding and intensifying itself, becoming hazardous to the eurozone.
Germany has a very important function in the eurozone debt crisis as it is a stability anchor. The economic situation in Germany is strong, compared to other eurozone countries. Germany has the dynamics to prevent another deep recession.
- What does the future of fiscal federalism in Europe hold?
The eurozone crisis has led to a revolution of European fiscal federalism and the dismantling of fundamental pillars in the fiscal constitution.
Prior to the crisis, eurozone member countries were independent and responsible for their own public debt. These rules have been forgottenand we are shifting towards fiscal union and solidarism where we guarantee for each other. This was unavoidable to some extent, but we must be careful, as this guarantee mechanism could create huge disincentives as countries now know that when theyenter public debt, others will cover for them.
We have made some big steps towards a fiscal union in Europe, but it has not been perfected. For political reasons, Germany is reluctant as voters do not want to take over the guarantee for Italian debt.
- How can sustainability be achieved in today's environment?
In order to achieve economic sustainability, we must look towards elements which will stabilise the vicious circle of deterioration and loss of confidence.
By remaining united, Europeans will find a way to stop this negative destructive crisis from escalating. Whenever it became critical in the past, we were ready to make unpleasant decisions, such as the euro umbrella. If necessary, I also expect the European Centralbank to activate all of its unlimited instruments. At the end of the day, I believe Europeans will be successful in preventing the crisis from escalating.
About the European Pensions & Investments Summit 2012
Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes visionary presentations and interactive forums on looking beyond volatility to pinpoint innovative investment approaches, modernising risk models and delivering returns in the new era of pension investing. For more information please send an email to firstname.lastname@example.org or visit the event website at www.epi-summit.com/FriedrichHeinemannInterview
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