Solar power is now cheaper than coal in some parts of the world

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Solar power is now cheaper than coal in some parts of the world. In less than a decade, it’s likely to be the lowest-cost option almost everywhere.

In 2016, countries from Chile to the United Arab Emirates broke records with deals to generate electricity from sunshine for less than 3 cents a kilowatt-hour, half the average global cost of coal power. Now, Saudi Arabia, Jordan and Mexico are planning auctions and tenders for this year, aiming to drop prices even further. Taking advantage: Companies such as Italy’s Enel SpA and Dublin’s Mainstream Renewable Power, who gained experienced in Europe and now seek new markets abroad as subsidies dry up at home.

Since 2009, solar prices are down 62 percent, with every part of the supply chain trimming costs. That’s help cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

These are game-changing numbers, and it’s becoming normal in more and more markets," said Adnan Amin, International Renewable Energy Agency ’s director general, an Abu Dhabi-based intergovernmental group. "Every time you double capacity, you reduce the price by 20 percent.”

solar vs coal costs

Better technology has been key in boosting the industry, from the use of diamond-wire saws that more efficiently cut wafers to better cells that provide more spark from the same amount of sun. It’s also driven by economies of scale and manufacturing experience since the solar boom started more than a decade ago, giving the industry an increasing edge in the competition with fossil fuels. In China, the biggest solar market, will see costs falling below coal by 2030, according to New Energy Finance. The country has surpassed Germany as the nation with the most installed solar capacity as the government seeks to increase use to cut carbon emissions and boost home consumption of clean energy. Yet curtailment remains a problem, particularly in sunnier parts of the country as congestion on the grid forces some solar plants to switch off.

solar farm cost

Sunbelt countries are leading the way in cutting costs, though there’s more to it than just the weather. The use of auctions to award power-purchase contracts is forcing energy companies to compete with each other to lower costs.

An August auction in Chile yielded a contract for 2.91 cents a kilowatt-hour. In September, a United Arab Emirates auction grabbed headlines with a bid of 2.42 cents a kilowatt-hour. Developers have been emboldened to submit lower bids by expectations that the cost of the technology will continue to fall.

We’re seeing a new reality where solar is the lowest-cost source of energy, and I don’t see an end in sight in terms of the decline in costs,” said Enviromena’s Khoreibi.compared with $1.14 now, a 36 percent drop, said Jenny Chase, head of solar analysis for New Energy Finance.

That’s in step with other forecasts. 

  • GTM Research expects some parts of the U.S. Southwest approaching $1 a watt today, and may drop as low as 75 cents in 2021, according to its analyst MJ Shiao.

  • The U.S. Energy Department’s National Renewable Energy Lab expects costs of about $1.20 a watt now declining to $1 by 2020. By 2030, current technology will squeeze out most potential savings, said Donald Chung, a senior project leader.

  • The International Energy Agency expects utility-scale generation costs to fall by another 25 percent on average in the next five years. 

  • The International Renewable Energy Agency anticipates a further drop of 43 percent to 65 percent for solar costs by 2025. That would bring to 84 percent the cumulative decline since 2009.

The solar supply chain is experiencing “a Wal-Mart effect” from higher volumes and lower margins, according to Sami Khoreibi, founder and chief executive officer of Enviromena Power Systems, an Abu Dhabi-based developer.

The speed at which the price of solar will drop below coal varies in each country. Places that import coal or tax polluters with a carbon price, such as Europe and Brazil, will see a crossover in the 2020s, if not before. Countries with large domestic coal reserves such as India and China will probably take longer.

Coal’s Rebuttal

Coal industry officials point out that cost comparisons involving renewables don’t take into account the need to maintain backup supplies that can work when the sun doesn’t shine or wind doesn’t blow. When those other expenses are included, coal looks more economical, even around 2035, said Benjamin Sporton, chief executive officer of the World Coal Association.

All advanced economies demand full-time electricity,” Sporton said. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”

Even so, solar’s plunge in price is starting to make the technology a plausible competitor.

In China, the biggest solar market, will see costs falling below coal by 2030, according to New Energy Finance. The country has surpassed Germany as the nation with the most installed solar capacity as the government seeks to increase use to cut carbon emissions and boost home consumption of clean energy. Yet curtailment remains a problem, particularly in sunnier parts of the country as congestion on the grid forces some solar plants to switch off.

Article From Bloomberg 

PIMCO : Hopes and fears of what the Trump presidency might bring over the secular horizon

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The first principle is that the distinction we normally make between secular (three to five years) and cyclical (six to 12 months) forces and timeframes is fuzzier than usual in this new macro environment. Both hopes and fears of what the Trump presidency might bring over the secular horizon
are driving current market moves, which in turn might create powerful feedback loops between markets, the economy and actual policies over our cyclical horizon, both in the U.S. and abroad. And so we spent more time than usual at a Cyclical Forum discussing secular forces and their interaction with cyclical trends, aided by the presence and insights of several of PIMCO’s advisors, including Ben Bernanke, Michael Spence, Gene Sperling and Ng Kok Song.

The second principle, agreed by a majority but not unanimously after a heated debate, is that while markets are romancing a “New Paradigm” of permanently higher U.S. growth, inflation and equilibrium interest rates, we believe that our secular New Normal / New Neutral theme remains intact, at least for now. Many of the secular drivers of low New Neutral interest rates – demographics, inequality, the global savings glut, elevated debt levels and technology – are unlikely to change anytime soon.


Investment conclusions

Against the backdrop of a highly uncertain outlook and fatter than usual tails, we expect to be cautious in overall portfolio construction, sticking closely to our secular framework that emphasizes these key factors:

  • A focus on capital preservation and a focus on tail risks, not just the most likely baseline

  • De-emphasizing trades that rely on a high level of central bank support

  • Guarding against the asymmetric risk of rising yields and especially against negative yields

  • Focusing on bottom-up security selection

  • Utilizing our teams across the world to find the best investment opportunities

  • A very selective approach on the eurozone

  • Careful overall portfolio positioning combined with active management to take advantage of periods of volatility and market dislocation

The experience of the past year has highlighted political risk and central bank policy exhaustion. At a time of fair to expensive valuations and less liquid financial markets, we have seen that it does not take much to prompt bouts of market volatility. By keeping portfolios lighter on risk and by being tactical and flexible as active managers, we can prepare for and look to benefit from market turning points. We think that patience will be rewarded.

Article written by Pimco. December 2016

Source :

The growth in global production of greenhouse gases

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The growth in global production of greenhouse gases has decelerated over the past few years, with 2015 seeing the first actual reduction, of 0.1% compared to 2014 levels, according to a European Union report published 6 December.

A “structural shift away from carbon-intensive activities” such as coal consumption in China and the US has been a key factor in curbing the emissions, the report said.

Meanwhile, US developers installed solar PV systems at the fastest pace on record in the third quarter – adding as much as a megawatt every 32 minutes, according to the Solar Energy Industries ; of the EPA, Pruitt could put his weight behind diluting the Clean Power Plan, which was halted by the US Supreme Court in February, pending a decision on its legality.

In other US news, former Texas Governor Rick Perry is rumoured to be the leading candidate for the position of energy secretary within the incoming administration. Perry is a board member of Energy Transfer Partners – the company whose North Dakota crude oil pipeline project is opposed by local residents and environmentalists.

Meanwhile, heavyweight investors including Bill Gates and Richard Branson are plowing capital into a $1 billion investment fund to power clean energy production. The aim of the 20-year fund, dubbed Breakthrough Energy Ventures, is to pump money into risky, long-term energy technology with the potential significantly to reduce greenhouse gas emissions, according to a statement by the fund.

Royal Dutch Shell is also participating to the trend towards low-carbon investment, with its biggest step yet into the offshore wind industry. The oil giant won a tender to provide power at 5.45 eurocents (5.8 US cents) per kWh from 680MW of offshore wind farms in the Netherlands. The contract is the second cheapest price seen yet for the technology. Sweden’s Vattenfall holds the current offshore wind record at 4.99 eurocents/kWh, the winning bid in Denmark’s 600MW Krieger’s Flak tender last month and discussed further in this BNEF.

Faced with a profound electricity shortage and large infrastructure deficit, Nigeria is stepping into the green bond market with plans to raise NGN 20bn ($63m) by March to fund renewable energy projects. Selling the sustainably-aligned notes to the international community will help West Africa’s biggest economy fund off-grid solar projects, an electric vehicle commuter project and a clean-up of oil spills in the southern Niger River delta.

Also in West Africa, Senegal’s second utility-scale solar project is on the cards, following news that Paris-based investor Meridiam is planning to build a 30MW solar plant east of Dakar. The Ten Merina project will cost about EUR 43m ($46m) and will be financed by an 18-year loan of EUR 34.5m from France’s Proparco and BIO, a Belgian development investor.

In other solar news, India plans to tender as much as 1GW of solar rooftop capacity this month in a bid to accelerate the installation of panels on government buildings, and to meet Prime Minister Narendra Modi’s goal of generating 100GW from the sun by 2022. Unlike a previous auction of 500MW in November, the winners of December’s competitive bidding process won’t receive full payments up front but instead will receive incentives in a step-by-step process as they meet completion timelines, according to Solar Energy Corporation of India.

Elsewhere in Asia, Japan is transitioning from feed-in tariffs for large-scale solar to a competitive auction system. In September, the Ministry of Economy, Trade and Industry will invite developers to submit bids to build a total of 500MW of solar power in projects of 2MW or larger, according to a ministry document. It is hoped that the plan will rejuvenate Japan’s lacklustre solar industry and give greater clarity to developers regarding the tariffs they can expect to receive.

From July 2012 to July 2016, Japan commissioned almost 30GW of solar PV plants, while the amount of yet-to-be-commissioned capacity – still eligible to receive feed-in tariffs -- exceeded 50GW in the period, according to this BNEF.


China to ramp up its offshore wind installations by 2020 (GW of capacity)

BNEF 12.2016 

Source: Bloomberg New Energy Finance

By the end of 2016, a total of 13.8GW of offshore wind capacity will have been installed worldwide, with more than $24bn invested in building new plants this year, according to BNEF. And by the end of the decade almost 40GW of offshore wind turbines will be installed in waters globally, the research organisation forecasts. 

In the graph above, 'other' includes Finland, France, Ireland, Italy, Japan, Korea, Taiwan, US, Norway, Portugal and Sweden.

Article from Bloomberg published on Dec. 13th, 2016

Per Jansson: Time to scrap the inflation target?

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To avoid keeping you on tenterhooks, I shall begin by answering the question in the title of my speech. No, it is not time to scrap the inflation target, in case any of you thought I wanted to. The question is of course rhetorical. The reason I ask the question is that I think it has been the focal point of the recent debate in Sweden, although it is not usually expressed so directly. Following the financial crisis the foundations of monetary policy certainly have been discussed and questioned around the world. But my feeling is that the debate has been driven further in Sweden than in most other countries.

Monetary policy in Sweden has often attracted interest from other countries. One reason is that we have often been among the first to implement changes in the monetary policy framework and thus become an interesting object of study. As is well-known, Sweden was one of the very first countries to introduce inflation targeting in the early 1990s, and we have in many respects remained at the front edge since then. For instance, the Riksbank is one of few central banks to publish its own forecast for the policy rate and possibly the only central bank where the minutes state which Board member has said what during the monetary policy meetings.

Speech by Mr Per Jansson, Deputy Governor of the Sveriges Riksbank, at Swedbank, Stockholm, 7 December 2016.

BRICS have closed the gap with European economies

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The data show that the EB 5 economies (Germany, the UK, France, Italy and Spain) have lost considerable ground in their share of world economic presence. Nonetheless, when we desegregate the data, we discover a number of peculiarities. The BRICS (Brazil, Russia, India, China and South Africa) have closed the gap with the EB5 much more than the N11 (Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam) have done, making the BRICS more interesting to analyse. Furthermore, within the BRICS, the out-performer (and hence outlier) is China; thus it could be argued that the rise of the rest might be better described as the rise of China. Interestingly, in recent years India has also performed well, and it could potentially become the new star of the BRICS. Russia, by contrast, has reached a plateau and might even reverse its gains. (Art. « The rise of Chemany »)


Article written by Miguel Otero-Iglesias, Senior Analyst in International Political Economy at the Elcano Royal Institute and published in the Eurasia Review.

The whole article is available hereunder :

December 13th, 2016

Interview with Mr Peter Praet : how optimistic are you about the European economy

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How optimistic or pessimistic are you about the European economy?

We see moderate but strengthening growth; that is better than it was a while ago. The main welcome surprise is the increase in employment, which is boosting people's disposable income.

How can you call this a surprise? We have had to wait for more jobs for so many years.

Of course, that is a fair point. But that is because of the excessively high growth expectations before the crisis. In Europe, there was a wide gap between overly optimistic expectations and reality. As a result, people were spending borrowed money. Governments were not overly concerned about the sustainability of their debts. The cause of this expectation gap was a decline in productivity. Sectors that had borrowed on the basis of excessive growth expectations ran into difficulties.

And it then takes a long time to recover from the crisis?

Indeed. Everyone needs time to bring their balance sheet back into shape.

Year after year, the ECB and the European Commission's projections were far too optimistic. You always thought that things would be better in the coming year. Did that not fuel scepticism?

Perhaps. In 2011 the European economy found itself in a second recession. We did not see that coming, as most analysts didn't. Italy has even undergone three recessions. That explains why, eight years after the outset of the crisis, citizens are becoming impatient. But there is now a danger that they will be tempted by simplistic solutions.

How much progress have governments made in restoring their economies?

Not enough. Some countries have undertaken a number of reforms, Greece being a case in point. But it had to make up so much lost ground that it is by no means finished yet. But there are also countries that are showing signs of reform fatigue.

Which countries are those?

You see that everywhere. We will have to see what happens in 2017, but 2016 was not a good year as regards economic reforms.

Are you referring to Italy and France?

Yes, but not only. Some reforms have been made there in respect of pensions and the labour market, but there is still a large backlog. Citizens are now displaying anger and resistance. They are disappointed in their expectations. We also see a deterioration in income distribution. For many people, the rise in income is lower than the growth in the economy.

Do you understand why voters are angry?

Yes, of course I do. And there is a strong temptation to opt for simplistic and national solutions, which in my view could be disastrous. Protectionism leads to chain reactions. That game quickly results in shrinking prosperity.

All these voters underwent austerity measures, their taxes were raised, they saw European politicians simply muddling through the crisis. And as a reward for all this misery, they also have to face painful pension and labour market reforms. Do you think it's any wonder that voters are saying "no"?

Of course, quick solutions to make reality meet expectations would be great. But, unfortunately, that is not possible. Easy answers are an illusion, because the gap between growth expectations and outcomes is real. The austerity measures are responses to this problem. If you set up your social security, your government expenditure on the basis of economic growth of 4%, while only 1% or less is realised for many years, then you enter into a vicious circle. That is why we need a comprehensive approach.

Even if anti-euro parties do not win a majority, they will still have strong support.

Confidence in the euro has remained high, also in the Netherlands, as the Eurobarometer survey shows. However, confidence in the ECB has declined sharply, especially during the crisis years. The situation in which the ECB was the only player that was still solving problems did it no favours, because people expected too much from us.

Is the monetary union not a part of the problem?

It was not only monetary union that led to a fall in risk premiums and interest rates, it was a global development that started well before the euro. Countries joining the euro saw their interest rates fall very quickly. That contributed to a real estate bubble in some countries. In other countries, it gave an overly favourable picture of public finances. At those low rates, the government debt suddenly appeared sustainable. The euro was born during that period, but it is difficult to determine what would have happened in twenty years without the euro.

Has the euro contributed to the divergence of the economies?

No, but I think there was an illusion of convergence. The real convergence of economies that was expected did not come about.

Maybe even the opposite.

No. When the crisis arrived, it made the divergence visible, but that does not make it the only reason.

What does the single currency still need?

I am not yet satisfied with the banking union. We are still in transition: supervision is European, but the consequences of potential bank failures are still largely borne at national level. But before you can solve that at the European level, you have first to deal with legacy problems in the banking sector. Banking union really has to be completed in five years, much faster than politicians think.

Are the biggest problems confined to Italian and German banks, or is it a wider issue?

It is fortunately limited to a few banks in a few countries. But there is another problem and that is the cost level of banks. It is still too high in many countries and it is the reason why banks' profitability remains weak. You need profitable banks to have a resilient banking sector that helps the real economy. There is hence a need for consolidation in the banking sector.

You would like to see larger banks?

We need to have diversity, large and small-sized banks. But I definitely think that we must have pan-European banks. That means that, in the event of a national economic shock, banks are not overexposed to any one country.

Are you not afraid that banks would then emerge which are too big to fail?

No, because at the scale of the euro area, they will not be too big. The basis is a European backstop.

But if you had two or three Deutsche Banks, wouldn't that be far too much for the euro area?

You can have large banks in small countries, if supervision and resolution are completely European. We are not there yet and 
we still have to complete the banking union in full.

The whole euro area is a fragile balance.

It is a balance that we are gradually making more stable by setting up the right institutions. We are on the right path. But there has to be a not too distant deadline for completing banking union.

Have other crisis measures, such as purchasing hundreds of billions of sovereign bonds, had the impact you hoped for?

Yes. It has stabilised the euro area and has resulted in better financing conditions. I think there have been a number of episodes with major risks, even for strong countries like Germany, risks, which we managed to fend off.

But banks, pension funds and savers are now weighed down by the low interest rates.

We keep a close watch on whether interest rates are not so low as to interfere with transmission, i.e. whether banks are still passing on the low interest rates to the real economy. As regards pension funds, one also needs to acknowledge that the performance of pension funds and their investments depends on many other factors and not only on interest rates.

Many savers feel as if they are now paying the price for the crisis.

I understand it can feel like that for savers. Borrowers benefit from favourable interest rates. But the costs for savers could have been much higher. Inaction would have led to a severe economic and financial crisis. They would probably have lost much of their wealth during the crisis.

Interview with Mr Peter Praet, Member of the Executive Board of the European Central Bank, in the Telegraaf, conducted by Mr Martin Visser and Ms Dorinde Meuzelaar on 12 December, and published on 20 December 2016.

Dow to Gold ratio - 100 year historical chart

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Among the services provided by Swiss ProfilInvest through specific Partners, precious metals remains one source of assets diversification and of real value.

The chart herebelow demonstrates the current value of the famous index of US companies, the Dow Jones Industrials, compared to gold in US dollars and not repriced for inflation. Higher the ratio, cheaper the gold price will be. Naturally, for a Swiss, a European or a Chinese, resident, parameters should be updated.

Please feel free to contact This email address is being protected from spambots. You need JavaScript enabled to view it. whether you need advices.

Article published on December 1st, 2016,

This interactive chart tracks the ratio of the Dow Jones Industrial Average to the price of gold. The number tells you how many ounces of gold it would take to buy the Dow on any given month. Previous cycle lows have been 1.94 ounces in February of 1933 and 1.29 ounces in January of 1980. (From

dow to gold ratio 100 year historical chart 2016 12 07 macrotrends

Bitcoins at a new record value

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Doubling its level from the start of 2016, bitcoin has crossed the $875 mark to record a new market cap all-time high of around $14.05B on the Bitstamp exchange. Analysts cited several reasons for the continued surge in prices, which range from a falling Chinese yuan, the increasing demonetization of cash and the recent restriction on physical assets. (22.12.16)

Preventing the Next Eurozone Crisis Starts Now

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This article gives a rare up-to-date and in-depth situation of the Euro zone instability and a few constructive solutions to pass through future crisis.  Please feel free to send your comments onto : This email address is being protected from spambots. You need JavaScript enabled to view it.


PARIS – European leaders have devoted scant attention to the future of the eurozone since July 2012, when Mario Draghi, the European Central Bank’s president, famously committed to do “whatever it takes” to save the common currency. For more than four years, they have essentially subcontracted the eurozone’s stability and integrity to the central bankers. But, while the ECB has performed the job skillfully, this quiet, convenient arrangement is coming to an end, because no central bank can solve political or constitutional conundrums. Europe’s heads of state and government would be wise to start over and consider options for the eurozone’s future, rather than letting circumstances decide for them.

So far, Europe’s leaders have had little appetite for such a discussion. In June 2015, they only paid lip service to a report on the euro’s future by the presidents of the various European institutions. A few weeks later, the issue briefly returned to the agenda when eurozone leaders spent a long late-July night arguing about whether to kick out Greece; but their stated intention to follow up and address underlying problems was short-lived. Finally, plans to respond to the Brexit shock by strengthening the eurozone were quickly ditched, owing to fear that reform would prove too divisive.

gratte ciel 2016

The issue, however, has not gone away. Although the monetary anesthetics administered by the ECB have reduced market tensions, nervousness has reemerged in the run-up to the Italian constitutional referendum on December 4. By end-November spreads between Italian and German ten-year bunds reached 200 basis points, a level not seen since 2014.

The worrying state of several Italian banks is one reason for the mounting concern. Brexit, and the election of a US president who advocates Americanism instead of globalism and dismisses the EU, adds the risk that voters, rather than markets, will call into question European monetary integration. Anti-euro political parties are on the rise in all major eurozone countries except Spain. In Italy, they may well command a majority.

On the economic front, the eurozone has much unfinished business. The banking union, launched in June 2012 to sever the interdependence of banks and states, has made good progress but is not yet complete. Competitiveness gaps between eurozone members have diminished, and external imbalances within it have abated, but largely thanks to the compression of domestic demand in Southern Europe; saving flows from North to South have not resumed. Unemployment gaps remain wide.

The eurozone still lacks a common fiscal mechanism as well, and Germany has flatly rejected the European Commission’s recent attempt to promote a “positive stance” in countries with room to boost spending. Of course, when the next recession hits, fiscal stability is likely to be in dangerously short supply.

Finally, the governance of the eurozone remains excessively cumbersome and technocratic. Most ministers, not to mention legislators, appear to have become lost in a procedural morass.

This unsatisfactory equilibrium may or may not last, depending on political or financial risks – or, most likely, the interaction between them. So the question now is how to hold a fruitful discussion to map out possible responses. The obstacles are twofold: First, there is no longer any momentum toward “more Europe”; on the contrary, a combination of skepticism about Europe and reluctance concerning potential transfers constitutes a major stumbling block. And, second, views about the nature and root causes of the euro crisis differ across countries. Given the dearth of political capital to spend on European responses, and disagreement on what the problem is and how to solve it, governments’ excess of caution is hardly surprising.

Both obstacles can be overcome. For starters, discussion of the eurozone’s future should not be framed as necessarily leading to further integration. The goal should be to make the eurozone work, which may imply giving more powers to the center in some fields, but also less in others. Fiscal responsibility, for example, should not be reduced to centralized enforcement of a common regime. It is possible to design a policy framework that embodies a more decentralized approach, empowering national institutions to monitor budgetary behavior and overall fiscal sustainability.

In fact, some steps in this direction have already been taken. Going further would imply making governments individually responsible for their misconduct – in other words, making partial debt restructuring possible within the eurozone. Such an approach would raise significant difficulties, if only because transiting to such a regime would be a hazardous journey; but options of this sort should be part of the discussion.

To overcome the second obstacle, the discussion should not start by addressing the legacy problems. Distributing a burden between creditors and debtors is inevitably acrimonious, because it is a purely zero-sum game. The history of international financial relations demonstrates that such discussions are inevitably delayed and necessarily adversarial when they take place. So the issue should not be addressed first. The seemingly realistic option of starting with immediate problems before addressing longer-term issues is only superficially attractive. In reality, discussions should start with the features of the permanent regime to be established in the longer run. Participants should explore logically coherent options until they determine if they can agree on a blueprint. It is only when agreement on a blueprint for the future has been reached that the path toward realizing it should be discussed.

There are no quick fixes to the eurozone’s problems. But one thing is clear: the lack of genuine discussion on possible futures is a serious cause for concern. Silence is not always golden; for the sake of Europe’s future, the hush surrounding the common currency should be broken as soon as possible.

December 1st, 2016

Jean Pisani-Ferry is a professor at the Hertie School of Governance in Berlin, and currently serves as Commissioner-General of France Stratégie, a policy advisory institution in Paris.