IDEAS home Printed from https://ideas.repec.org/a/oup/ecpoli/v31y2016i87p559-606..html
   My bibliography  Save this article

The six flaws of the Eurozone

Author

Listed:
  • Charles Wyplosz

Abstract

SUMMARY When it was created, it was reasonable to think that the architecture of the monetary union was not perfect. It was also likely that the imperfections would lead to difficulties, possibly even crises. This article identifies six flaws, most of which had been identified even before the launch of the euro. It starts by pinpointing why the Eurozone, a bold and unprecedented experiment, is inherently fragile. It is not conducive to the convergence of national inflation rates, it is not an optimum currency area, and it is not a federal state. Taking these characteristics as given, the article argues that the Eurozone needs to address their implications. It observes that it has not been the case so far, hence the six flaws: fiscal discipline has not been achieved; the need for a Banking Union, which has finally been recognized and only partly implemented; the ECB is not a complete and fully independent central bank; some member countries need a sovereign debt relief; structural reforms are badly needed but intrusiveness cannot be the solution; the governance of the Eurozone is not designed for crisis management.

Suggested Citation

  • Charles Wyplosz, 2016. "The six flaws of the Eurozone," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(87), pages 559-606.
    • Handle: RePEc:oup:ecpoli:v:31:y:2016:i:87:p:559-606.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/epolic/eiw008
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nauro F. Campos & Jarko Fidrmuc & Iikka Korhonen, 2017. "Business Cycle Synchronisation in a Currency Union: Taking Stock of the Evidence," GRU Working Paper Series GRU_2017_017, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    2. Koetter, Michael & Krause, Thomas & Tonzer, Lena, 2019. "Delay determinants of European Banking Union implementation," European Journal of Political Economy, Elsevier, vol. 58(C), pages 1-20.
    3. Hartmann, Philipp & Smets, Frank, 2018. "The first twenty years of the European Central Bank: monetary policy," Working Paper Series 2219, European Central Bank.
    4. Francesco Spadafora, 2020. "Completing the Economic and Monetary Union: Wisdom Come Late?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 379-409, November.
    5. Francesco Spadafora, 2019. "European integration in the time of mistrust," Questioni di Economia e Finanza (Occasional Papers) 512, Bank of Italy, Economic Research and International Relations Area.
    6. Zhorayev, Olzhas, 2020. "The Eurozone Debt Crisis: Causes and Policy Recommendations," MPRA Paper 106331, University Library of Munich, Germany.
    7. Czerniak, Adam & Borowski, Jakub & Boratyński, Jakub & Rosati, Dariusz, 2020. "Asset price bubbles in a monetary union: Mind the convergence gap," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 288-302.
    8. Paolo Pasimeni & Stéphanie Riso, 2019. "Redistribution and stabilisation through the EU budget," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(1), pages 111-138, April.
    9. Jan Philipp Fritsche & Patrick Christian Harms, 2020. "Better off without the Euro? A Structural VAR Assessment of European Monetary Policy," Discussion Papers of DIW Berlin 1907, DIW Berlin, German Institute for Economic Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecpoli:v:31:y:2016:i:87:p:559-606.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/cebruuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.