Antonio Fazio, ex Govenor of Italy’s Central Bank, endorses Varoufakis’ analysis

Screen Shot 2016-04-02 at 18.02.06.png[The report below  is an abridged English translation of an article in Katholisches under the title Varoufakis, DiEM25 und Papst Franziskus For the English translation of the whole article, click here.]

Antonio Fazio, the ex Govenor of the Italian Central Bank, criticizes EU Economic Policy… Fazio who is an economist and a practising Catholic known for his outstanding knowledge of the writings of Thomas Aquinas, had several discussions with journalist Eugenio Fatigante which served as a basis for this article. Fatigante also interviewed Varoufakis.

In the first part, Fazio summarised the history of international and European economic policy during the 20th century in a way easily understood by laypeople. He particularly focused on the hyperinflation in Germany during the Weimar Republic in 1920s.

In the second part, he criticised current EU economic policy which seems to have an “almost crazy” fixation on currency stability only rather than on investment and economic growth. His reservations about Italian entry into the European Monetary Union (1996) and his country’s participation in the Euro introduced in 2002 are well-known .

Fazio’s principle argument is as follows:

The economic surplus in the balance of payments of certain European countries (Germany as a prime example) should be employed for capital expenditure in their own country or in other EU countries and not be used for financial investments.

To emphasize this, he referred directly to Varoufakis.

In his opinion, the former Greek finance minister, Yanis Varoufakis who has been severely criticised, understood things better than most. The basis for his argument is: “If, instead of using 300 billion for quantative easing (even if Mario Draghi was doing the right thing within the limits of the law), it should have been used for investment in the economy and not to buy government bonds thus covering an expense which others had already made. Therefore, if 300 billion each year were invested in projects chosen by the European Investment Bank – and the corresponding private bonds were bought by national central banks – then the economic situtation would be immediately improved.

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