Don't Let the Eurozone Crisis Go East

While the sovereign debt crisis continues worsening in the Euro area, European partners are still hesitating in offering some help, considering that Europe must rely primary on its own resources and fix its failed governance. Still, this crisis constitutes a new, major risk for other countries, especially in Asia. Not only is Europe a large market that needs to be kept solvent, but Asian countries could have a stake in the survival of the euro that, for the next decade, is likely to provide the only credible complement to the US dollar as an international currency. Financial assistance would best be channelled through the International Monetary Fund in exchange for further reforms in the governance of the Fund. Additionally, Asian countries can contribute to solve the Euro area crisis by offering dynamic markets to European firms through faster rebalancing of Chinese growth and further opening up of local markets. This Lettre du CEPII draws on the seventh meeting of the Asia-Europe Economic Forum held in Seoul on 9 December 2011.