The ECB’s continuing program of bond purchases and its emergency lending to struggling banks show the underlying instability of the eurozone.Mehr erfahren
What went wrong?
A deep belief in self-regulating markets and market-driven integration failed to lead to convergence. It instead led to divergence and major imbalances.Mehr erfahren
New Economy in Progress
New research focuses on the policies – macroeconomic, institutional and regulatory – needed to ensure convergence, prevent shocks and improve crisis management.Mehr erfahren
CHART: Unemployment rates in Europe
(%, available workforce)
5 ways that are discussed to strengthen Europe:
- Make the ECB’s role as lender of last resort an explicit part of its mandate, not an implicit political deal as it is at present.
- Establish a common European safe asset in place the current de facto safe asset - the 10-year German government bond.
- Establish pan-eurozone deposit insurance and with it the risk of deposit flight, and self-fulfilling runs on banks.
- Reform fiscal rules so that governments are not forced to cut spending in economic downturns.
- Introduce much tougher penalties for countries running persistent trade imbalances, be they surpluses or deficits.