MercoPress. South Atlantic News Agency

What went wrong with the Euro? It was like some kind of sleeping pill

EU president Herman Van Rompuy blamed the past strength of the European single currency for making the Euro zone unaware of its fiscal problems, in an interview with the Financial Times.

“What went wrong wasn't what happened this year. What went wrong was what happened in the first 11 years of the Euro history. In some ways we were victims of our success” Van Rompuy told the business daily.

“The Euro became a strong currency... It was like some kind of sleeping pill, some kind of drug. We weren't aware of the underlying problems,” he added.

According to the FT, he acknowledged that the markets had played a useful role since the Greek debt crisis erupted last October in identifying weaknesses in Euro zone economic governance.

But the paper added that he fully supported tougher financial market regulation, especially for credit rating agencies and derivatives markets - measures EU authorities are drawing up.

Rompuy also attacked financial markets for overreacting to Europe's economic difficulties and being swayed by “rumours and prejudices.”

“The markets were too indulgent in the first decade, but now they overreact a lot of the time to small incidents,” Rompuy said.

A task force under Rompuy has started work on reforms to reinforce budget rules and changes are planned to tighten financial regulations after the global economic crisis.

“Most of us are not happy with excessive market developments,” Rompuy told the FT. “But when you look at this in a broader perspective, the markets are sanctioning bad policies, sometimes excessively, disproportionately and based on rumours and prejudices.”

Rompuy told the paper European leaders were committed to implementing tough reforms to safeguard the euro zone's future. “The toughest thing now is reforms in the budgetary field and the economy competitiveness, labour market reforms, the retirement age,”