HONG KONG — The euro is here to stay as a global currency and the eurozone will bounce back from its debt crisis, European Union Commissioner for the Internal Market Michel Barnier said Monday. Barnier repeated his surprise at ratings agency Standard & Poor’s decision last week to downgrade nine eurozone states, saying the currency bloc’s 17 members had taken “giant steps” toward restoring confidence. “Let there be no mistake: this is not a crisis of the euro as a currency,” he told delegates to the Asian Financial Forum, a gathering of regional banking and finance chiefs in Hong Kong. “The euro is here to stay. In the last 10 years the euro has proven itself as a true world currency … And despite the difficulties, it remains strong. “The real crisis the eurozone faces right now is a crisis of confidence. Our political unity and our determination and our ability to rectify what is wrong … are being tested.” Standard & Poor’s downgraded nine eurozone states Friday, including France and Austria, on concerns about high government debt levels and funding costs.
The agency said European policymakers’ response to the crisis, including the outcome of a summit last month, “may be insufficient to fully address ongoing systemic stresses in the eurozone.” But Barnier said ratings agencies needed to “take better account of the unprecedented efforts being made by governments” to overcome the crisis. He said he was “surprised time and time again by the timing agencies choose to make such announcements,” and called for greater transparency in how they reached their decisions. “I would like to have these ratings agencies signal that there was a problem five or six years ago, not now,” he told reporters on the sidelines of the forum. “I want to make sure that when they make these announcements they are fully taking into account the efforts being made by the governments.” Even so, he said he did not want to downplay the seriousness of the threat to European economic stability.
“We need to avoid another large credit crunch and disastrous consequences for the real economy,” he said, adding that the sovereign debt crisis was “spilling over” into the interbank lending market. The European Commission forecasts 0.5 percent growth in the euro area this year.