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The Euro Area Crisis Management Framework: Consequences and Institutional Follow-Ups

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  • Ansgar Belke

Abstract

The current instruments in the EU to deal with debt and liquidity crises include among others the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). Both are temporary in nature (3 years). In terms of an efficient future crisis management framework one has to ask what follows after the EFSF and the EFSM expire in 3 years time. In this vein, this briefing paper addresses the question of the political and economic medium-to long-term consequences of the recent decisions. Moreover, we assess what needs to be done using this window of opportunity of the coming 3 years. Which institutions need to be formalized, into what format, in order to achieve a coherent whole structure? This briefing paper presents and evaluates alternatives as regards the on-going debate on establishing permanent instruments to support the stability of the euro. Among them are the enhancement of the effectiveness of the Stability and Growth Pact combined with the introduction of a "European semester" and a macroeconomic surveillance and crisis mechanism, fiscal limits hard-coded into each country's legislation in the form of automatic, binding and unchangeable rules and, as the preferred solution, the European Monetary Fund.

Suggested Citation

  • Ansgar Belke, 2010. "The Euro Area Crisis Management Framework: Consequences and Institutional Follow-Ups," Discussion Papers of DIW Berlin 1076, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1076
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.363450.de/dp1076.pdf
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    References listed on IDEAS

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    1. Burda, Michael & Wyplosz, Charles, 2017. "Macroeconomics: a European Text," OUP Catalogue, Oxford University Press, edition 7, number 9780198737513.
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    Cited by:

    1. Christian Kirchner & Ansgar Belke & Christoph Degenhart & Joachim Wieland, 2011. "Schuldenkrise der Euro-Peripherieländer: Wie sollte die Restrukturierung der Schulden geregelt werden?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(11), pages 03-16, June.

    More about this item

    Keywords

    EU governance; European Financial Stability Facility; European Financial Stabilisation Mechanism; European Monetary Fund; policy coordination; Stability and GrowthPact;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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