Joe Bidens Treasury Secretary listed eurozone flaws one by one – Mario Draghi outraged
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US President Biden is exerting pressure on Brussels to kill plans for an EU digital tax due this month. Janet Yellen, the US Treasury Secretary, has dismissed the EU’s claim its scheme can work in harmony with the G7 tax deal for a global minimum rate of at least 15 percent. A note by a US diplomat urged Brussels to delay the bloc’s attempt to create a digital levy.
Washington argued the go-it-alone approach would “threaten” parallel talks on rewriting corporation tax taking place at the Organisation for Economic Co-operation and Development.
The memo, seen by the Financial Times, reads: “The timing of this proposed levy would risk entirely derailing the tax negotiations as a sensitive juncture.”
Ms Yellen is likely to deliver the warning to EU tech chief Margrethe Vestager when they hold talks later today.
The US Treasury Secretary was sworn in at the end of January, just a few weeks before former European Central Bank (ECB) President Mario Draghi became Italy’s new Prime Minister.
The two used to be close when Ms Yellen was at the helm of the Federal Reserve and Mr Draghi at the ECB.
Many believed their appointments would have meant stronger relations between Italy and Washington, and also with the EU as a whole – but cracks are already showing.
Despite their friendship, the two have not always seen eye to eye, either.
According to new Italian book “L’Artefice” by Jana Randow and Alessandro Speciale, Ms Yellen actually sparked the ire of Mr Draghi at a dinner organised by the BIS.
Ms Yellen fiercely criticised the eurozone, listing its many flaws, the book claims.
The book reads: “To this day, Yellen openly admits that she was never ‘enthusiastic about the euro’.
“It seems she had been much less diplomatic in the informal conversations between colleagues gathered for dinner in Basel.
“According to two witnesses, she listed the flaws of the single currency one by one.
“Her criticisms, added to those of the BIS, that the anomalous policies of the ECB were sowing the seeds of a future crisis, outraged the future President of the ECB.
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“‘Yours is a counterproductive attitude’, he seems to have blurted out, then continuing more or less along this line.
“‘We are aware of the risks, but the fact remains that the economy today needs a supportive monetary policy.’
“‘It’s too easy to just cry wolf, so you can say, in two or 10 years, ‘See? I told you.
“‘You should be more analytical.'”
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Ms Yellen is not the only prominent US figure who has criticised the single currency.
At an event organised by Junior Achievement, a non-profit that teaches children about business, in 2011, American investor Warren Buffett explained why the euro is ultimately doomed to fail.
He said: “That is something I would have not done… in terms of linking 17 countries to a single currency.
“Just imagine if 10 or 15 years ago I had proposed the US formed the Western hemisphere currency union… We would have taken Canada and that would have probably been okay.
“But then we would have taken Mexico, Peru, Ecuador… And would that sustain itself if they follow different fiscal policies and have different cultures?”
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