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Euro Zone between Recent Evolutions and Perspectives

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  • Dobre Elena

    () (“Ovidius” University of Constanta, Faculty of Economics Sciences)

Abstract

Global economy was significantly affected by the global financial crisis and especially the budget balance of all countries. Sovereign debts cause the lack of stability and the shift of monetary policy. This paper is about the recent evolutions in euro zone and its perspectives. The Euro break –up scenario should give unexpected consequences. Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change. On the other hand, the Euro break –up means economic and political costs which are not agree at the moment. The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. The risk case, of break-up, is considerably more costly and close to zero probability. Countries cannot be expelled, but sovereign states could choose to secede. So, the perspectives of Euro Zone are fiscal confederation and fiscal discipline, not break-up.

Suggested Citation

  • Dobre Elena, 2011. "Euro Zone between Recent Evolutions and Perspectives," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 362-369, May.
  • Handle: RePEc:ovi:oviste:v:xi:y:2011:i:9:p:362-369
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    Keywords

    euro zone; break –up scenario; economic costs; monetary policy; fiscal policy;

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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