Marco Buti, Maya Jollès, Matteo Salto, 19 February 2019

The launch of the Economic and Monetary Union in 1999 was a considerable challenge and a historic milestone. The first decade of its existence firmly established the euro as a credible construction. As this column describes, however, from 2008 onwards the economic and financial crisis in Europe laid bare the weaknesses of its initial construct. Some assumptions behind the EMU institutional setting had to be reconsidered and, in the following years, considerable efforts were made to strengthen the EMU. To complete the job, we need to rebuild trust and overcome the creditors/debtors divide. 

Roel Beetsma, Martin Larch, 10 May 2018

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. 

Marco Buti, Servaas Deroose, José Leandro, Gabriele Giudice, 13 July 2017

Despite much being done to strengthen the Economic and Monetary Union, it remains incomplete and this is one of the main reasons for the Eurozone's lacklustre economic performance in the recent years. While there are still diverging views on how to "cross the river", there is also a political and economic window of opportunity to complete the EMU architecture. This column discusses the ideas presented in a new European Commission Reflection Paper aimed at relaunching the debate on how to move forward, with a focus on bridging the differences between the member states that stress responsibility and risk reduction and those calling for solidarity and risk sharing.

André Sapir, 12 February 2016

Misalignments of real exchange rates continue to be the most visible and painful symptom of asymmetric shocks within the Eurozone. An important factor behind such misalignment is the difference in national wage formation and bargaining systems, especially between core and periphery members. This column argues that all members need to have institutions that ensure wage developments are in line with productivity developments. This would eliminate an important source of asymmetric behaviour and reduce resistance to EZ-wide fiscal mechanisms capable of absorbing asymmetric shocks.

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