The Euro: Why it Went Wrong and How to Get On?
A The lesson from the past is tough, but undeniable: All currency unions that were not anchored in state like political structures were wrecked sooner or later. This became the outcome when the economic development of participating countries began to drift apart, and the internal contradictions between the different countries tightened. A prolonged period with a deficit on the current account of the balance of payment is usually characterized by a continuous loss of jobs and rising unemployment at a later stage. The longer the deficit countries stay within the monetary union and have to accept growing foreign indebtedness the more they feel that the monetary union represents a straitjacket, which eventually will develop into a financial crisis. Originally the political and economic foundation of the EU was ‘peace and democracy’. Today the project seems to have deteriorated into only economic considerations. There is a risk that this deadlock could deteriorate the European integration process in such a way, that it no longer is a matter of ‘how to save the euro’, but of ‘how to save the EU’ from falling apart. Those who claim that the EU will go with a (partial) dissolution of the euro have not understood what the real challenge to Europe is: how to reorganize monetary cooperation within the EU in such a way that the process of disintegration is brought to a stop. This would require some kind of dismantling the rigid fiscal compact and to create a fixed, but flexible currency system.
Volume (Year): 1 (2013)
Issue (Month): 68 (June)
|Contact details of provider:|| Postal: Reconquista 266 - C1003ABF - Buenos Aires|
Phone: (54-11) 4348-3582
Fax: (54-11) 4348-3794
Web page: http://www.bcra.gov.ar
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Issing,Otmar & Gaspar,Vitor & Angeloni,Ignazio & Tristani,Oreste, 2001.
"Monetary Policy in the Euro Area,"
Cambridge University Press, number 9780521783248, Junio.
- Luc Eyraud & Anke Weber, 2013. "The Challenge of Debt Reduction during Fiscal Consolidation," IMF Working Papers 13/67, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:bcr:ensayo:v:1:y:2013:i:68:p:23-42. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Federico Grillo)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.