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Europe after the crisis: less or more role for nation states in money and finance?

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  • André Sapir

Abstract

With the completion of the single European market and the full liberalization of capital markets two separate trilemmas emerged in the early 1990s: a monetary trilemma between free capital movements, fixed exchange rates, and national monetary autonomy; and a financial trilemma between free capital movements, financial stability, and national financial supervision autonomy. The paper argues that although these two trilemmas stem from the same root cause, financial integration, the financial trilemma is particularly acute for countries that have chosen to resolve the monetary trilemma by entering into a monetary union. The lesson from the recent crisis is that eurozone countries need to replace their national financial supervision institutions by supranational institutions capable of managing and resolving financial crises. This will require pooling together some of their fiscal sovereignty. Copyright 2011, Oxford University Press.

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  • André Sapir, 2011. "Europe after the crisis: less or more role for nation states in money and finance?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 27(4), pages 608-619.
    • Handle: RePEc:oup:oxford:v:27:y:2011:i:4:p:608-619
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    File URL: http://hdl.handle.net/10.1093/oxrep/grr027
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    Cited by:

    1. van Riet, Ad, 2016. "Safeguarding the euro as a currency beyond the state," Occasional Paper Series 173, European Central Bank.
    2. André Sapir, 2014. "Still the Right Agenda for Europe? The Sapir Report Ten Years On," Journal of Common Market Studies, Wiley Blackwell, vol. 52, pages 57-73, November.
    3. Donny TANG, 2020. "What determines the portfolio investment flows to Central and Eastern European Countries in the European Union 2001-2017?," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(625), W), pages 21-42, Winter.

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