MercoPress. South Atlantic News Agency

Financier Soros warns about future of the Euro and Euro-zone

A fully fledged currency needs both a central bank and a treasury argues Soros

The Euro risks falling apart unless Euro-zone member nations alter the way they tackle future debt crises, financier George Soros warned Monday in an article published in the Financial Times.

The 2008 financial crash “revealed the flaw” in the Euro construction, Soros said, adding, “If member countries cannot take the next steps forward, the Euro may fall apart”. Soros called the Euro construction “patently flawed” as he argued that “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. 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.“

The billionaire investor also claimed that makeshift assistance will leave intact bigger problems Europe is facing amid the future uncertainty of the Euro.

”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 Euro-land to be helped in this way,” Soros said.

However, the European Union executive Monday denied a German magazine report that the Euro-zone could provide aid to Greece of 20-25 billion Euros, saying no such plan existed, leaving the rescue of Greece also in question. Greece's deficit swelled to 12.7% of GDP in 2009, way above the EU cap of 3%.

“It is clear what is needed: more intrusive monitoring and institutional arrangements for conditional assistance. A well-organized Euro-bond market would be desirable. The question is whether the political will for these steps can be generated” asks Soros who adds that “even more than Greek statistics, political will has always been Europe’s biggest problem”.

Separately, Wall Street banks involved in the arranged swap agreements with the Greek government, which may have helped hide the country's true deficit, are still under the shadow of the possible scandal if it's proven that they were actively involved in helping Greece massaged its budget.

Greece missed a deadline Friday from the European Commission to give a full account of financial operations.