Governments must force the markets to change their perceptions of the eurozone, writes János Martonyi, Hungary’s foreign minister in the latest issue of European Voice.
"What we need now is a pooling of eurozone sovereign debt in order to stabilise the eurozone by virtue of sheer size and liquidity. This could stem panic and turn attention back to the eurozone’s strong economic fundamentals, to the steady improvement in improving balances and to long-term re-building", Mr Martonyi wrote.
"Understandably, some fear their support could be abused. That, though, misses an important point: the reconstruction of our system of economic governance is well under way. And if we believe that treaty change would promote economic and political cohesion, we should act immediately", the foreign minister added.
The foreign minister of a country that is not in the eurozone is joining the choir of those calling for the introduction of debt mutualisation because Hungary "...is not an outsider: it is bound by the EU treaty to adopt the euro as soon as it meets the criteria", Mr Martonyi explained.
"Shell-shocked investors are seeking security. They find it in the advice of credit-rating agencies to ‘dump everything’, putting those agencies in the driving seat, a seat in which governments are supposed to sit. Small wonder, then, that many believe rating agencies have become part of the problem rather than the solution".
"But insofar as politicians have failed to offer investors assurance to replace the perception of sovereign debt as rock-solid, the markets can be forgiven for being disoriented, even destructive", the Hungarian foreign minister wrote.
Turning to Hungary, Mr Martonyi wrote: "... in the war of perceptions, facts matter little. If policy responses are perceived to be inadequate, expectations turn negative, investors flee and downgrades ensue. When that happened in mid-November to Hungary, ... we immediately sought the co-operation of the International Monetary Fund (IMF) and the EU – a move that surprised many but that will eventually, I hope, break the vicious circle of negative perceptions about Hungary in a way that our continuously improving deficit and debt figures have been unable to".