EU Economic Policy and Architecture after Covid
Debate Moderator(s): Jean Pisani-Ferry, Jeromin Zettelmeyer
At CEPR, contributing to research and policies on European integration, policy choices and reform strategies has always been key. For three decades, CEPR has promoted and published such work in its series of reports on Monitoring European Integration, Monitoring the European Central Bank and Monitoring the Eurozone (Corsetti et al. 2015, 2016).
More recently, CEPR opened this VoxEU debate to discuss a relatively narrow question: how to strike the optimal balance between risk sharing and good incentives in reforming the architecture of the euro area. We received many good contributions, initially in response to the “7+7” proposal of French and German economists that kicked off the debate (Bénassy-Quéré et al. 2018).
Part of this debate remains relevant, but in the wake of Covid-19, it must be broadened, reflecting the broad agenda covered by CEPR’s Research and Policy Network on European Economic Architecture, established in late 2018, and in particular the transformations that we have witnessed over the last 12 months.
With this in mind, we would welcome research-based contributions of the usual VoxEU length (1,000-1,500 words, and never above 2,000) in the following areas:
1. Reform of the fiscal framework (both NGEU and the SGP)
2. Monetary-fiscal interactions
3. Banking and capital markets union
4. Macroeconomics and finance of the green transition
5. Divergence and convergence in the euro area
6. The euro in a changing global environment
7. European public good
8. Macro policies emerging from the pandemic, strategies and sequencing
Please send your submissions to Jean Pisani Ferry ([email protected]) and Jeromin Zettelmeyer ([email protected]), copying Kirsty McNeill ([email protected]).
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Commentaries
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Jakob Vestergaard, 16 July 2018
Lead Commentaries
A central bank view of reforming Europe’s fiscal framework
The economic landscape has changed dramatically since the European fiscal rules were designed some 30 years ago. This column contributes to the debate on reform by proposing a two-tier fiscal framework combining an expenditure rule that accounts for the ECB’s inflation objective with a lower speed of adjustment under the Stability and Growth Pact’s debt rule. Counter-cyclicality may be improved by automatic modulation of adjustment requirements, creating fiscal space when domestic inflation is low and constraining more when inflation is above target. The link to the debt anchor ensures a gradual phasing-in of debt reduction in the aftermath of COVID-19.
How to ensure that European fiscal rules meet investment
The role of fiscal rules is to ensure debt sustainability and predictability of fiscal policies. It is possible to make them simpler and more friendly to countercyclical policies. Rather than allowing for different investment priorities, this column argues that the Covid crisis, the climate emergency, and Russia's invasion of Ukraine and subsequent security concerns may require a holistic approach where better compliance with fiscal rules could be combined with a holistic definition of sustainability that would also include macroeconomic and green sustainability.
Managing sovereign debts held by the Eurosystem
There have been various proposals for how to manage the sovereign debt portfolio accumulated by the Eurosystem in its efforts to raise inflation and provide emergency support in response to the pandemic. This column argues that the euro area needs a new mechanism to free the Eurosystem of the encumbrance of its sovereign portfolio. Such a mechanism cannot be provided by the Eurosystem itself, since this would eventually be inconsistent with its mandate. Instead, the European Stability Mechanism could perform that task while respecting all relevant European law.
Reforming the European fiscal framework: Increasing compliance, not flexibility
Debt ratios of EMU member states, which were already high in some cases, have increased significantly during the pandemic. This column argues that the current review of the European fiscal framework should not only discuss the design of the framework, but also how to strengthen enforcement and increase compliance with the fiscal rules. Increasing the political costs of non-compliance – through a reduction of complexity of the framework, an increase in national ownership and transparency, as well as simplicity of assessment – could help achieve this. Adding more flexibility, exceptions, and discretionary judgement would be counterproductive.
How to reconcile increased green public investment needs with fiscal consolidation
The EU’s ambitious emissions reduction targets will require a major increase in green investments. This column considers options for increasing public green investment when major consolidations are needed after the fiscal support provided during the pandemic. The authors make the case for a green golden rule allowing green investment to be funded by deficits that would not count in the fiscal rules. Concerns about ‘greenwashing’ could be addressed through a narrow definition of green investments and strong institutional scrutiny, while countries with debt sustainability concerns could initially rely only on NGEU for their green investment.
Fiscal is local: EU standards for national fiscal frameworks
The European fiscal governance framework has grown into an arcane machinery. Yet, experts’ convergence on the need for a more effective and simpler system falls on political deaf ears. Greater reliance on national fiscal frameworks could significantly strengthen European fiscal governance while passing political hurdles. The authors of this column see value in further strengthening national ownership of fiscal responsibility while keeping central safeguards against risky fiscal behaviour.
Revising the European fiscal framework, part 2: Debt management
In January 2023, the escape clause triggered to suspend the rules of the Stability and Growth Pact will expire, possibly forcing painful fiscal adjustments in countries that are already struggling with the impact of the pandemic. In this second column in a two-part series, the authors focus on the debt management aspect of their proposal to strengthen the European fiscal framework. They argue for moving a portion of national debts under the umbrella of a European Debt Management Agency, with the aim of reducing debt costs for the whole Union and helping the operations of the ECB in debt markets.
Revising the European fiscal framework, part 1: Rules
Over the last few years, there has been a growing consensus that the current rules of the Stability and Growth Pact are outdated, too complicated, and not countercyclical enough. The authors of this column present a proposal to strengthen the European fiscal framework based on two elements: a revision of the fiscal rules, and a plan to create a European Debt Agency to absorb the debt accumulated during the pandemic. This first of two parts focuses on the fiscal rules and proposes setting a ceiling on the growth rate of primary spending, to be revised over three-year intervals, targeting debt reduction over a ten-year horizon.
Combining environmental and fiscal sustainability
The EU’s current fiscal framework has failed to fully deliver on both its goals: ensuring long-term discipline and facilitating a countercyclical fiscal stance. This column argues that the political difficulties of agreeing on a comprehensive Stability and Growth Pact reform can be side-stepped by allowing the Pact to remain in place while attracting countries into a parallel system. The author proposes the establishment of a new European Climate Investment Facility to provide grants and loans to fight climate change until 2050, when the Union must reach net zero emissions, and an independent European Fiscal Agency to assess the good standing of member states to access this new facility.
Reforming the EU macroeconomic policy system: Economic requirements and legal conditions
The stability and adequacy of the European monetary and fiscal frameworks are increasingly challenged by enduring changes in the economic environment. This column summarises the findings of a group of economists and lawyers specialised in EU matters who undertook a comprehensive assessment of the economic requirements and legal conditions of a well-functioning macroeconomic policy system for the EU and the euro area. They propose reforms of economic framework in line with economic necessities along three dimensions (coordination of fiscal and monetary policies, fiscal rules, and fiscal capacity at EU level) and assess their legal feasibility. They conclude that meaningful reforms that would bring legal clarity and improve economic performance are feasible within the confines of existing primary law.
The need for better fiscal rules in Europe
European policymakers are considering whether to reinstate the existing fiscal rules with only the most necessary adjustments, or to put in place a better framework. This column proposes reform anchored in the most important economic criteria for public sector debt sustainability. First, ‘standards’ for a healthy budget composition that should include an agreed minimum ratio of investment relative to GDP and the principle that countries with public debt in excess of a certain level of GDP will reduce that ratio during ‘good years’. Second, a higher-frequency ‘rule’ to flag potential trends which might compromise future public debt sustainability, in the form of a cap on projected interest payments as a share of fiscal revenue.
An all-weather economic policy framework for the euro area
The euro area’s economic policy framework was created in the early 1990s, when neutral interest rates were positive and the main risk was excessive inflation. This column argues that today’s world is very different from the 1990s, and thus requires a new economic policy framework where monetary and fiscal policy can work together effectively to support inflation and growth. The author identifies flaws in the current euro area fiscal framework and suggests how these could be fixed and complemented with a simple, state-contingent fiscal policy rule that achieves the right balance between supporting growth and inflation and ensuring debt sustainability.
The emerging fiscal union needs a solid foundation
The EU’s response to the COVID-19-induced economic crisis has been aggressive, but not without criticism. This column, part of the Vox debate on euro area reform, summarises some of the shortcomings of the way in which the EU’s Next Generation programme may play out, and suggests short- and longer-term considerations that need to be made in order to ensure that the programme strengthens the Union in the long run.
A new template for the European fiscal framework
The temporary suspension of the European fiscal rules to enable member states to take emergency measures against the Covid crisis offers an opportunity for an ambitious reform of a now clearly outdated fiscal framework. This column, part of the Vox debate on euro area reform, argues that the reactivation of the rules, now foreseen in 2023, should be made contingent on a political agreement on reforming the fiscal framework, and proposes a comprehensive reform in which the new European fiscal framework would prioritise externalities arising from debt sustainability risks and demand spillovers. Fiscal targets should be differentiated depending on country vulnerabilities and implemented in a more decentralised way.
Ditch the EU’s fiscal rules; develop fiscal standards instead
The EU’s fiscal rules are currently suspended. If reinstated, they will need to be modified to account for the higher levels of debt. This column, part of the Vox debate on euro area reform, argues that simple fiscal rules provide a crude and unsatisfactory assessment of debt sustainability and proposes that they be replaced with fiscal standards. In particular, it calls for qualitative prescriptions that leave room for judgement together with a process to decide whether the standards are met. This proposal envisages a larger surveillance role for independent fiscal councils and/or the European Commission, as well as a judicial body for adjudication over disputes.
EU economic policy and architecture after Covid: Rebooting the debate on the EU reform roadmap
The financial crisis of 2007-2012 was the first wake up call to the inadequacy of the euro area architecture when facing a large systemic crisis. This column explains why the Covid crisis will leave a deeper impact on the European policy system, and re-introduces the Vox debate on Europe’s economic architecture in the context of the transformations that we have witnessed over the past year. Contributions to the debate are welcome.
COVID-19: A euro area safe asset and fiscal capacity are needed now
The COVID-19 outbreak that is hitting the euro area economy needs to be met by a powerful policy response beyond the emergency measures already in place. This column uses an empirically calibrated model to show that the creation of a safe asset and fiscal capacity at the centre – on which the debate has been ongoing for a long while – would be a powerful means to mitigate the economic impact of the crisis.
A digital euro to save EMU
The desire to avoid credit and investment boom-bust cycles has led some to advocate replacing money creation through bank credit extension with direct money issuance by the central bank or a private entity, or linking money to an existing asset. This column, part of the Vox debate on euro area reform, argues that relaunching the euro as digital central bank currency could help reduce the debt of the euro states and end the sovereign-bank doom loop. It would also create a formidable competitor for other global digital currencies likely to emerge in the intermediate future.
Pragmatism with a long-term vision should prevail in euro reform
Preparations for reforming the euro area have stalled, with experts disappointed that politicians have not heard their proposals. This column, however, is optimistic that the euro area can be reformed via a pragmatic reorientation without high-profile changes to the EU Treaty. The reforms must cover a reorientation of fiscal policy towards a long-term vision and entail revamping the Eurosystem to allow it to perform its proper role as a central bank.
Regulating the doom loop
At a leaders’ summit in June 2012, euro area governments recognised the imperative of breaking the doom loop resulting from sovereigns being exposed to bank risk and vice versa. But bank regulation still treats sovereign debt as risk-free and does not penalise concentrated portfolios. This column, part of the Vox debate on euro area reform, asks whether banks would reduce portfolio concentration in response to reforms, and whether they would reduce exposures to sovereign credit risk. Simulations show that the answer is never an unambiguous and simultaneous ‘yes’ to both questions under reforms envisaged by the Basel Committee on Banking Supervision.
Euro area architecture: What reforms are still needed, and why
In January 2018, CEPR published a Policy Insight recommending euro area reforms which received broad support as well as some criticism. In this column, the authors argue that the problems that prompted their paper are still there, new problems are on the horizon, and the current state of the policy conversation on euro area reform is disappointing. They also identify priorities that should be at the centre of discussions on reform.
A European fiscal capacity can avoid permanent transfers and improve stabilisation
Calls to complement national automatic stabilisers and the ongoing financial integration in the euro area with a common fiscal instrument have provoked a mixed response. This column, part of the VoxEU debate on euro area reform, uses a dynamic stochastic general equilibrium model of the euro area to show that fiscal risk sharing brings an additional layer of stabilisation compared to national stabilisers, particularly when monetary policy is constrained by the effective lower bound. It also argues that an unemployment reinsurance scheme could be designed in such a way that it would benefit all members of the currency area and would not lead to permanent transfers among countries.
A more stable EMU does not require a central fiscal capacity
A central fiscal capacity is a recurring topic in discussions on reform of the Economic and Monetary Union, but no consensus on the usefulness and necessity of a such a capacity has been reached. This column, part of the Vox debate on euro area reform, argues that the potential stability benefits of a central fiscal capacity can be achieved through stronger financial market risk sharing and more effective use of fiscal stabilisers, without any additional fiscal risk sharing.
Reforming the EU fiscal framework: A proposal by the European Fiscal Board
Reforming the EU’s rules is particularly important at the present juncture – governments must take advantage of the current environment to prepare for the next crisis. This column, part of the Vox debate on euro area reform, outlines the European Fiscal Board’s proposals for a major overhaul of the EU fiscal framework, which it argues would result in a simpler and more transparent framework thanks to the use of a single budgetary anchor and a single observable operational target.
Fixing the euro needs to go beyond economics
The agenda to fix the euro is hampered by conflicting national interests. Creditor countries demand fiscal house cleaning and debtor countries ask for risk sharing. There is currently a political deadlock about how the adjustment burden should be distributed, perpetuating a state of vulnerability that is not in the collective interest of euro area members. This column, part of the Vox debate on euro area reform, argues that overcoming this coordination failure requires reforming the political governance of the EU, rather than just its economic governance.
Increasing the effectiveness and ownership of European fiscal rules
European fiscal rules have become overly complex over time. Some consider them too lax to ensure fiscal sustainability, while others see them as too rigid to ensure adequate smoothing of economic activity in bad times. This column, part of the Vox debate on euro area reform, argues that to make the rules more effective, they should be simplified and focus on expenditure growth, while avoiding reliance on unobservable concepts such as structural fiscal balances. Increased ownership requires more flexibility and built-in positive incentives, such as allowing deviations when financed with GDP-linked bonds, which would also improve fiscal sustainability.
Turning national growth-indexed bonds into European assets
The idea of growth-indexed bonds has recently regained momentum in policy circles, but research has shown they are unlikely to substantially decrease the risk of a debt explosion in advanced economies if not issued through a large and coordinated mechanism. This column, part of the VoxEU debate on euro area reform, proposes such a mechanism for the euro area – a European Debt Agency issuing securitised safe and risky European bonds backed by country-specific growth-indexed bonds.
Euro area reform: An anatomy of the debate
A year ago, a group of 14 French and German economists joined forces with the aim of forging common proposals for euro area reforms. Their report gave rise to a lively discussion among officials and academics. This column summarises the group's proposals and also addresses some of the points raised in a subsequent Vox debate on the topic.
‘Black zero’ in disguise
Two proposals for reforming the euro area’s fiscal framework were published on Vox yesterday. This column describes how, in essence, the proposal from the French economists is based on discretionary policy decisions while their German counterparts propose a largely rules-based approach. It also argues that with its assumption that the medium-term goals of fiscal policy cannot be determined by simple formulas, the French proposal is closer to the status quo than the German concept and has a greater likelihood of resulting in good fiscal policy.
The economic case for an expenditure rule in Europe
Proposals for reforming the euro area back on the agenda. An overhaul of the European fiscal rules should be on high on this agenda, because the current fiscal framework has not worked well. This column proposes substituting the numerous and complex present rules with a new, simple rule focused on limiting annual growth rate of expenditures.
Refocusing the European fiscal framework
Simplicity and transparency are essential to strengthen the effectiveness of fiscal rules and to ensure sustainable public finances; thus the German Council of Economic Experts has criticised recent reforms of the European fiscal framework for exacerbating their complexity. This column proposes a redesign of the existing fiscal framework together with a drastic reduction in exception and escape clauses. The reformed framework employs a modified expenditure benchmark as an annual operational target. In addition, it implements the structural deficit rule as its medium-term target through a multi-purpose adjustment account, and a pre-specified debt ratio as its long-term limit achieved with a debt-correction factor.
Could the 7+7 report’s proposals destabilise the euro? A response to Guido Tabellini
The proposed package of reforms from the team of French and German economists aimed at increasing the stability of the euro area has sparked a lively debate on Vox. In this column, two of the paper’s authors respond to some of the criticisms of their proposals, focusing on the broad issues of debt restructuring as ‘ultima ratio’ and regulating banks’ sovereign exposures.
Whither a fiscal capacity in EMU
In their CEPR Policy Insight, the team of French and German economists focus on a compromise between market discipline and risk sharing. This column, part of the VoxEU debate on euro area reform, argues that their proposal fails to address legacy debt problems convincingly and that the introduction of a fiscal capacity would repeat the mistakes made at the introduction of EMU, with later steps towards European integration being attempted before the necessary first steps have been taken.
Delivering a safe asset for the euro area
The euro area debt crisis saw the region ravaged by multiple sovereign bond doom loops and has inspired several proposals for a single safe asset for the region. While a lack of political consensus has proven the main obstacle to date, technical issues relating to the complexity of splitting the existing sovereign debt stock and concerns on contagion amongst senior and junior debt structures also weigh in. This column, part of the VoxEU debate on euro area reform, illustrates how a 20-year Purple bond transition could address these issues and offer a path to genuine Eurobonds.
Risk sharing and market discipline: Finding the right mix
A key question in the debate on the reform of the euro area concerns the right mix between risk sharing and market discipline. This column, part of the VoxEU debate on the topic, argues that proposals to enhance market discipline in the euro area are counter-productive, because they increase the vulnerabilities of countries with high legacy debts.
Next steps after the Euro Summit
EU leaders addressed euro area reform at the Euro Summit on 29 June. In this column, which we add to the VoxEU debate on euro area reform, the group of 14 French and German economists behind the recent CEPR Policy Insight on the topic argue that the summit statement represents a constructive first step and crosses red lines that were considered taboos only a few months ago. However, the summit’s commitments still fall short of a comprehensive package.
A ‘what if’ approach to assessing proposals for euro area reform
The policy discussion on euro area reform has entered a critical phase. This column, part of the VoxEU debate on euro area reform, attempts a ‘what if’ experiment based on the proposals in the recent CEPR Policy Insight. Focusing on the Greek case, it looks at the counterfactual case of such proposals having already been implemented at the outset of the crisis and examines their potential role in preventing the outbreak of the crisis or mitigating it once it was underway.
Euro area reform cannot ignore the monetary realm
The authors of the recent CEPR Policy Insight argue that the euro area needs an alternative to the current system of fiscal rules and financial penalties to discipline fiscally wayward members. This column, part of the VoxEU debate on euro area reform, argues that by not complementing their proposals with recommendations in the monetary realm, the authors have missed an opportunity to provide a balanced reform package that would not only increase fiscal discipline and risk sharing, but also enhance liquidity provision.
Beyond risk sharing and risk reduction
Deepening of EMU cannot wait until all countries have carried out all their domestic reforms, both risk sharing and risk reduction need to proceed simultaneously. In fact, all euro area countries are exposed to the risk of an incomplete monetary and economic union but with very asymmetric costs. This column, part of the VoxEU debate on euro area reform, argues that this risk can only be tackled with common instruments and policies at the European level, whose mere existence will reduce not only its magnitude but also its asymmetric consequences.
Beyond ESBies: safety without tranching
The euro area lacks a common safe asset, leaving banks to rely on bonds issued by their own countries and thus magnifying fiscal crises and contributing to financial fragmentation. To address this problem, an influential proposal advocates sovereign-bond backed securities, the most senior of which would play the role of safe asset. This column, which introduces a new CEPR Policy Insight, investigates whether criticism of the proposal’s reliance on securitisation is justified and compares it with alternatives that would not require tranching.
Make euro area sovereign bonds safe again
In their recent Policy Insight, the team of French and German authors suggest introducing sovereign bond-backed securities to play the role of safe asset in the euro area. This column, part of the VoxEU debate on euro area reform, argues that an improved euro area architecture would, in the long run, make all euro area sovereign bonds safer, and thus make the provision of safe assets through untested and potentially disruptive sovereign bond-backed securities unnecessary.
A plan to save the euro
For the euro area to be stable and move forward productively, substantial improvements in its operation are required. This column, part of the VoxEU Euro Area Reform debate, argues that the proposals in the recent CEPR Policy Insight are necessary if the euro area is to avoid another catastrophic crisis and that they would go a long way towards addressing the legitimate concerns of citizens in both the core and periphery of the euro area.
Fiscal rules and the role of the Commission
The proposals on fiscal frameworks and rules in the recent CEPR Policy Insight on euro area reform showcase the multiple dimensions of the fundamental dilemmas we are confronted with in the governance of the euro area. This column, part of the VoxEU debate on Euro Area Reform, looks at the challenges to the central role of the Commission that have arisen as the rules-based fiscal framework has been severely compromised.
Completing Europe’s Banking Union means breaking the bank-sovereign vicious circle
Several euro area leaders have recently referred to the need to "complete the Banking Union". This column, part of VoxEU's Euro Area Reform debate, asks what would be required for Banking Union to be considered "complete", and makes the case for a modest approach to breaking the vicious circle between banks and sovereigns.
Euro area reform: No deal is better than a bad deal
The recent proposals for euro area reform from a team of French and German economists have initiated an intensive debate. This column, part of VoxEU's Euro Area Reform debate, argues that the specific insolvency risk of euro area membership is the main risk that should be covered by joint risk sharing, and that the modest proposals for public and private risk sharing are insufficient in this regard.
Risk reduction and risk sharing in the EU: The role of better fiscal rules
The key question in the policy debate on the next steps for the Economic and Monetary Union seems to be whether we can progress with integration in a context where some countries perceive themselves as consistently paying for policy mistakes of others, while others see themselves victims of a moral diktat. This column, adding to VoxEU's Euro Area Reform debate, argues that the policy dilemma around a central fiscal capacity can only be overcome if fiscal risk sharing and risk reduction advance in parallel. Therefore, reform of EU fiscal rules need to receive more attention.
Refocusing the debate on risk sharing under a European Deposit Insurance Scheme
Recent months have seen many proposals for alternative designs for a European Deposit Insurance Scheme that would cater for concerns that such a scheme would lead to some banking sectors having to bear the costs of bank failures in other member states. This column, adding to VoxEU's Euro Area Reform debate, asks whether these concerns are well founded.
Europe needs a broader discussion of its future
When thinking about what will determine the prosperity and well-being of citizens living in the euro area, five issues are central. This column, part of VoxEU's Euro Area Reform debate, argues that the important CEPR Policy Insight by a team of French and German economists makes an important contribution to two of them, but leaves aside some of the most crucial ones: European public goods, a proper fiscal stance and major national reforms. It also argues that its compromise on sovereign debt appears unbalanced.
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.