Euro Area Reform
Debate Moderator(s): Jean Pisani-Ferry, Jeromin Zettelmeyer
Policy Insight 91: Reconciling risk sharing with market discipline: A constructive approach to euro area reform
Related Content:
- Vox Column: How to reconcile risk sharing and market discipline in the euro area
- VoxTalk: Reconciliation and reform: Risk-sharing and market discipline in the Euro Area
- Vox Column: Panic-driven austerity in the Eurozone and its implications
Some reactions to the report, and independent contributions that have already been published by leading economists:
A Franco-German consensus on the euro?
By Martin Sandbu, 17 January 2018 in the Financial Times
Sandbu writes: “a group of 14 French and German economists, many of the best policy-oriented thinkers of both countries … have come together to create a consensus road map on eurozone reforms … Decision makers in all eurozone countries should place this contribution prominently on their policy drawing boards.” Read the full article here: (https://www.ft.com/content/51e75114-fb63-11e7-9b32-d7d59aace167)
Find information on how to add a comentary to this debate here
Lead Commentaries
Deepening EMU requires a coherent and well-sequenced package
The debate on deepening EMU is entering a critical stage. This column, contributing to VoxEU's Euro Area Reform debate argues that while the proposals in a recent CEPR Policy Insight are both timely and attractive, the mix seems unbalanced and carries significant risks. The focus of the proposals on reducing fiscal risks could lead to financial distress, ultimately requiring more, not fewer, rescues.
Analysis of the proposal “A constructive approach to euro area reform”
There is currently both an economic and a political window of opportunity for reform in the euro area. This column, which forms part of VoxEU's Euro Area Reform debate, discusses the strengths and weaknesses of the proposals in the recent CEPR Policy Insight and makes recommendations for extensions and alternatives.
The role of the ECB in the reform proposals in CEPR Policy Insight 91
One criticism of the recent CEPR Policy Insight on euro area reform is its supposed silence on the role of the ECB. In this column, which we add to VoxEU's Euro Area Reform debate, two of the authors of the Policy Insight argue that the reforms proposed in it actually have significant implications for the ECB’s role, in a way that would make it easier for the ECB to fulfill its mandate.
Building a stable European Deposit Insurance Scheme
Deposit insurance, like any insurance scheme, raises moral hazard concerns. Such concerns arising from European deposit insurance can be alleviated through a country-specific component in the risk-based premium for deposit insurance and limits on sovereign bond exposures on bank balance sheets. This column, which forms part of VoxEU's Euro Area Reform debate, argues, however, that proposals to maintain national compartments in a new European Deposit Insurance Scheme are self-defeating, as such compartments can be destabilising in times of crisis.
EMU: Liquidity of solvent member states more important than fiscal stabilisation
The smooth functioning of the EMU requires risk sharing. This column, which joins VoxEU's Euro Area Reform debate, argues, however, that its best use is not in the support of fiscal expansion in recession countries, but in ensuring the liquidity of solvent sovereigns under market pressure. Giving the ESM/EMF access to central bank financing should be explored as a means to facilitate it.
Blind spots and unintended consequences of the 14 economists’ Policy Insight
The recently published CEPR Policy Insight by a team of French and German economists proposes a package of reforms to make progress on risk sharing and risk reduction in the euro area. This column, which forms part of VoxEU's Euro Area Reform debate, argues that while many of the package’s elements make sense, it leaves too many questions open and fails to address a number of central problems of EMU architecture.
A stronger euro area through stronger institutions
A team of French and German economists recently proposed on this site a series of reforms to strengthen the euro area's institutional framework. This column, which joins VoxEU's Euro Area Reform debate, argues that while the proposals form a useful basis for discussion, they are nevertheless subject to important shortcomings.
Breaking the stalemate on European deposit insurance
Many EU-level reports have highlighted a European Deposit Insurance Scheme as a necessary component of banking union, but none of these options has met sufficient consensus among euro area countries. The authors of this column, which joins VoxEU's Euro Area Reform debate, propose to end the deadlock with a design that is institutionally integrated but financed in a way that is differentiated across countries.
The crux of disagreement on euro area reform
A recent report by a group of French and German economists proposed a set of reforms to improve euro area’s financial stability, political cohesion, and potential for delivering prosperity to its citizens. This column, which joins VoxEU's Euro Area Reform debate, discusses some specific aspects of the proposals that in the author’s view deserve further clarification, and considers the overall implications of the proposals for financial stability of the euro area.
How to reconcile risk sharing and market discipline in the euro area
The euro area continues to suffer from critical weaknesses that are the result of a poorly designed fiscal and financial architecture, but its members are divided on how to address the problems. This column proposes six reforms which, if delivered as a package, would improve the euro area’s financial stability, political cohesion, and potential for delivering prosperity to its citizens, all while addressing the priorities and concerns of participating countries.