Germany and the euro-zone crisis: the European reformation of the German banking crisis and the future of the euro

Abstract

Analysis of the German response to the euro crisis has been framed around a narrative of the relationship between domestic sacrifice and hegemony and sustains an assumption that the German commitment to the euro is proven. Such analysis downplays the importance of the banking crisis in Germany in explaining the decision-making of the German government around the euro-zone debt crisis. Giving German interests in relation to the German banking crisis analytical weight can explain both the positions taken by the German government and their consequences for the underlying structural problems the euro-zone faces as a monetary union. Since the outcomes of German policy have advanced German interests, German handling of the euro-zone crisis cannot sustain a claim that Germany has demonstrated its commitment to the euro.