G20 mechanism need to face a mixed future world

A seminar themed "The future of the European economy" was held in Chongyang Institute for Financial Studies, Renmin University of China (RDCY) here in Beijing on Tuesday.Jacques Mistral, the professor of economics and also the senior fellow of the Brookings Institution, is giving speech. [Photo by Wu Zheyu/chinadaily.com.cn]

A seminar themed "The future of the European economy" was held in Chongyang Institute for Financial Studies, Renmin University of China (RDCY) here in Beijing on Tuesday. Jacques Mistral, a senior fellow of the Brookings Institution gave a keynote speech about the European economic future.

Jacques Mistral used to serve as economic advisor to the French Prime Minister, Michel Rocard, from 1988 to 1992, and the special advisor of political economy and international relations to the Minister of Economics, Finances from 2000 to 2001, which makes his research may well shed light on the European economy’s history and future dynamics to China’s readers given his rich political experience.

There’s a shared recognition that challenges like debt crises, sluggish growth, populism, the immigration crisis, Brexit, terrorism are spread widely among advanced and emerging economies, and professor Jacques tries to explain and discuss with audiences where Europe stands in the world today and how are the EU and the Eurozone are moving forward in this global context.

Professor Jacques introduced, "It was a long and difficult path to creating the Euro, said the professor. It was horribly difficult for governments to make policy decisions in a completely unexpected situation. Governments initially made serious policy errors that have fueled negative expectations for two years. They were nonetheless sharing huge common interests."

"Then the authorities progressively made sensible decisions, and they finally surmounted their ideologies and national preferences to find solutions in cooperation. Since the Treaty of Rome in 1957, a crisis in Europe has always been an opportunity to push integration further. So as for monetary decisions, The European Central Bank (ECB) will do whatever it takes to save the euro.”

And as for building a better International Monetary System (IMS), professor Jacques suggests, "The IMF is and should remain the core of the IMS, it should be reinforced and gain legitimacy. And also the IMF should be more powerful to control international imbalances and prevent competitive devaluations or debt defaults. Promote the Special Drawing Rights (SDR) as a true international currency, serving for transactions, store of value and financing."

In conclusion, professor Jacques said, ”The world economy has until now avoided a catastrophic depression but remains fragile: slow growth, financial risks, social unease, political uncertainties. And the risk of a currency war is not over. In this context, the euro is an anchor, both for the Europeans and for the rest of the world: both trust the € and they are right. The euro is an asset for preserving monetary peace in the long run.”

In response to China Daily website’s inquiry about how he would predict the world economy’s development in 2017, he said," The world economy would be regionally solid, but the rate of growth has been disappointing, financial risks remain high in some parts of the world, on top of it, we still have political uncertainty in some areas, so in conclusion we could say it’s a mixed vision of the future, but I think we should have an international cooperation mechanism like the G20 summit to discuss perspectives on trade, climate change and financial policies."

He Fan, the chief economist of RDCY commented on the seminar with the China Daily website: "Currently, not just in academic circles but also among the public, they tend to believe that the European economy is seriously damaged and would remain dim for quite a period of time. While professor Mistral told us that European countries actually had gone through a variety of difficulties and they already have fruitful experiences to cope with the dilemma. That’s the very point that deserves audience's attention in particular."