Sunday, 6 November 2011
CANNES: India has asked the European Union to create a lender of last resort to help troubled countries of the Eurozone, questioning the architecture of the single currency union.
"A monetary union without a central fiscal authority was not a good arrangement," Prime Minister Manmohan Singh said after the end of two-day G-20 summit here.
He said India had a big stake in the European Union and a crisis there could have a significant impact on trade and capital flows into India.
Singh said he had suggested at the summit that the European Central Bank should be positioned as a lender of last resort. Prime minister said he had mentioned the idea to German chancellor who was receptive of the suggestion.
"If you want a fiscal union you would require a change in the constitution of the countries of Eurozone and that is an uncertain process," he said, adding that only institution capable of acting as the lender of last resort is the ECB. "If the function of lender of last resort could be devolved on the ECB that would be an act that will inspire great confidence in the Eurozone," he said.
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