The International Monetary Fund says European Union members in debt-laden eastern and central European countries should consider scrapping their domestic currencies in favour of the euro to restore economic order, the Financial Times reports.
In a confidential report, compiled a about a month ago, the IMF said the eurozone could relax its entry rules so countries could join as quasi-members without holding European Central Bank board seats.
The recommendation formed part of a campaign by the IMF, the World Bank and the European Bank for Reconstruction and Development to persuade the EU and eastern European states to back a region-wide anti-crisis strategy, including a regional rescue fund.
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This failed amid widespread opposition from both west and east European states, according to the newspaper.
“For countries in the EU, euroisation offers the largest benefits in terms of resolving the foreign currency debt overhang [accumulation], removing uncertainty and restoring confidence,” the IMF report said.
“Without euroisation, addressing the foreign debt currency overhang would require massive domestic retrenchment in some countries, against growing political resistance.”