Stating that the situation in Europe is not as bad as is generally believed, European Financial Stability Facility (EFSF) CEO Klaus Regling Tuesday asserted that the euro is "irreversible".
"There were the first signs in financial markets that the EU response to the Eurocrisis was working but that there was a need for more fiscal, economic and political union," he argued.
Regling was speaking at the inaugural lecture of the IISS-Oberoi lecture series titled "The Euro and the Future of Europe".
Britain-based think tank, International Institute for Strategic Studies (IISS) and India's Oberoi Group have launched the lecture series and the IISS Oberoi Discussion Forum, where lectures will be delivered by major personalities of importance and influence in global international affairs and of interest to the professional community.
While delivering the lecture, Regling pointed out that Europe has already mobilised almost $1.5 trillion, of which two-thirds is available for disbursement. "This is an unprecedented degree of internal solidarity," he said.
He said that despite the lack of confidence exhibited by markets, members of the Eurozone and European Union have made significant progress towards sounder public finances, broader economic surveillance and more efficient financial market supervision.
"European economies have been putting their houses in order on the back of gradual fiscal consolidation and healthy export growth," he said.
However, Regling emphasised on the continuation of the "adjustment process" and that "a contraction in economic activity is inevitable".
"Structural reform and not devaluation is the answer to Europe's problems. If this is done, Europe will return to long-term sustainable growth," he said.
"Structural reforms, such as modernising public administrations, improving labour market performance and enhancing the tax systems, with the aim of increasing competitiveness and growth potential is required," he elaborated.
Regling conceded that Greece is the most difficult problem and that it had a solvency problem compared to the others which had liquidity problems.
However, he noted that member states of the Euro area have to continue on their way to bring down debt to sustainable levels, restore financial stability and strengthen their growth potential.
He also highlighted the fact that plans have already been laid for the establishment of a banking union and a fiscal union, underpinned by an integrated economic policy framework.