Chairman of the Eurogroup Jeroen Dijsselbloem has said the countries that use the euro need to make their financial systems stronger to fend off possible economic shocks from a hard Brexit.
Speaking to RTÉ News in Dublin, Mr Dijsselbloem said Brexit was a bad idea, but that it was going to happen, and that all parties needed to minimise the damage it would cause.
Mr Dijsselbloem said it was a lose-lose situation for all and because of that the focus should be on minimising the cost, speeding up the talks process and "a little more common sense from British side".
He said a deal was needed on time and that required "shaping up" on the British side.
Dijsselbloem: Eurogroup needs to make financial systems stronger to address potential hard Brexit shocks pic.twitter.com/yWuxGDpPtT— RTÉ Business (@RTEbusiness) October 23, 2017
In relation to the trade aspect of the talks, he said he was in agreement with the stance of the European Union that negotiations on trade could not take place until the divorce matters had been dealt with.
He added that a good trade deal between the EU and the UK was crucial for Ireland, for the Netherlands and many other countries, but said it must be done in the current order.
In relation to preparations being made by the Netherlands for a hard Brexit, he said they needed to make sure there were no economic shocks
Mr Dijsselbloem said arrangements would have to be made inside a trade deal, and if not, emergency arrangements without a trade deal.
He said much could be done to develop the financial market and make it more resilient.
"I think we need to make sure that we are more resilient and that we can deal with the thing that's eventually going to happen. The UK is going to leave the EU 27. There will be trade in the future, with or without a trade deal, there will be arrangements to make sure that trade keeps going. The key thing is how to minimise the costs, how to minimise the damage to the economy in the euro zone."
Speaking to RTÉ News before making a speech at the Institute for International and Eurpean Affairs in Dublin, Mr Dijsselbloem said: " I think the whole Brexit was a terrible idea, but there’s not much we - the Dutch or Irish - can do to reverse it: All we can do is manage it was well as possible and minimise the damage.
"It's what I call a lose/lose situation: We're going to lose out, so we have to minimise the costs and that requires speeding up the process, getting a little more common sense on the British side, and trying to make sure we don’t go down that very difficult, chaotic route at the end of the process - we need to get that deal in time, and that requires shaping up on the British side".
Both the Netherlands – where Mr Dijsselbloem is finance minister until Thursday – and Ireland do a lot of trade with the United Kingdom, and are the two EU states that will be hit hardest by Brexit.
British media list the Dutch and Irish among the EU states that would like to move to discussions on the post-Brexit trade deal quickly.
But Mr Dijsselbloem says the Netherlands strongly backs the EU 27 position on the timing and sequencing of the talks process.
"We have taken a united stand with the EU 27 and we fully support that stand - we have to have an agreement on the exit - the divorce papers - before we can move to trade.
"No doubt having a trade deal between the EU and the British is crucial to Ireland and the Netherlands and many other countries. But we must do it in this order because there are many big issues to be sorted first".
Asked about the priorities in preparing for a hard Brexit scenario, he said: "We need to make sure there are no economic shocks or shocks to the finance sector - the city is very important - so arrangements will have to be made - preferably inside a trade deal, but if not emergency arrangements outside a trade deal - but let's not jump to conclusions yet. There is time, but the clock is ticking.
"I think we need to make sure we are more resilient, and we can deal with the thing that is going to happen: the UK is going to leave the European Union.
There will be trade in the future either with or without a trade deal, there will be arrangement to make sure that trade keeps going: the key thing is to minimise the costs and the damage to the economy in the Euro Area.
"I think there is a lot we can do ourselves to make ourselves more resilient - develop financial markets inside the euro zone for example."
Reflecting on his time as Chairman of the Eurogroup – the meeting of finance ministers of the 19 countries that use the single currency, and the main forum for dealing with the Euro Crisis of 2012 and Greek crisis of 2015, Mr Dijsselbloem said: "I think most of the mistakes were made before the crisis when we allowed risks to build up in our economies, in our banks, in how markets worked, and in some countries in our budgets.
"And during the crisis we have had to put all that right in very difficult circumstances. The key lesson to learn is that we are prepared better for future events: "There are bound to be shocks in the future and we need to ensure that on the public and private side we are better prepared for shocks.
"Already during the crisis years a lot has changed - we have improved our frameworks, the rules, the institutions: We have an emergency fund – the ESM (European Stability Mechanism).
"We should build further on that experience. A lot of people are talking about changing the ESM to a European Monetary Fund that could support countries in reforming, becoming more competitive, becoming stronger. The ESM could support those countries in changing."
As for the Banking sector, he said the next logical step in building resilience was the creation of deposit insurance scheme at Euro Area or EU level, to compliment those existing in member states, and spread the risk.
"We have set up the banking union, and part of this is how to deal with banks in trouble, it's called a resolution framework, and we are building up a resolution fund to help those banks and protect government budgets.
"We have a deposit insurance scheme at national level but it would be stronger and provide more security if it were done at euro zone level, so that’s a logical next step."
One idea for euro zone reform – backed enthusiastically by the new French President Emannuel Macron – is for an "economic government" of the Euro Area, with a "Minister for Finance" overseeing the Euro group full-time, supervising national budget strategies and co-ordinating economic policy to try and maximise growth and avoid crashes.
This could include a Euro Area budget, possibly funded by a direct funding source. Mr Dijsselbloem was sceptical of the ideas amounting to much in the near term.
"There has been a lot of discussion, but I don’t see a convergence of ideas yet. Introducing a euro zone tax would be a major political decision, and I don’t see a lot of support for that as yet.
"But what we can do inside the EU budget is to have what the Commission calls a convergence instrument, to help countries to upgrade their economic situation, become more competitive and improve their economies.
"That could be a transfer within the EU budget, and we have the ESM that could become a monetary fund to finance change.
"But the idea of a minister for finance needs a lot more discussion. If you have a minister you presumably have a government; we don’t have a government of the EU, or a minister, that’s something for further discussion."
The Greek Crisis has taken up a lot of Jeroen Dijsselbloem’s time as Chairman of the Eurogroup, particularly in the first half of 2015, when Yannis Varoufakis was finance minister.
Since then the new Syriza Finance Minister, Euclid Tsakalotos, has introduced reforms based on a third bailout programme, and the country has slipped from the international headlines.
Mr Dijsselbloem says: "We had a near-Grexit in 2015, but it has gone a lot better since 2015. The third programme we have now is running quite well, reforms have been taken on, the economy is growing, unemployment is falling. But the crisis was very deep, and the starting point was very negative. But all signs are showing green now".
Asked if the shock of Brexit could travel all the way to Greece and undo the progress made since 2015, Mr Dijsselbloem said: "No I don’t think so - the political commitment to keep Greece inside (the euro area) - and it’s been quite a political price for all of us - that commitment is very strong, and I don’t think Brexit will undo that commitment".