The euro’s history has been marked by half-steps, derogations, and political expediency. This essay argues that Eurozone leaders must complete the Economic and Monetary Union that is needed to underpin the euro if they are to avoid a serious risk that the Eurozone in its current form will fail. Europe must find the courage to address its structural shortcomings in order to boost potential growth. Fiscal adjustment alone is not the solution.
Charles Wyplosz, 17 June 2010
Some see the Eurozone crisis as a harbinger of a more perfect union, others as the euro’s death knell. In contrast, this essay explains the current situation as something in-between; the Eurozone is levitating on the hope that an exit strategy can soon be found. The key is to establish fiscal discipline in every Eurozone member. As a real European government is politically impossible, this must be based on national institutions that can guarantee fiscal discipline.
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