Can the report of the ‘five presidents’ save the euro?
European Journal of Economics and Economic Policies: Intervention
Edward Elgar Publishing
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Arestis, P. (2016). Can the report of the ‘five presidents’ save the euro?. European Journal of Economics and Economic Policies: Intervention, 13 (1), 28-38. https://doi.org/10.4337/ejeep.2016.01.04
The international financial crisis of 2007/2008 and the ‘great recession’ that followed, as well as the euro crisis, have highlighted a range of problems and difficulties that are related to some fundamental weaknesses of the euro. There are well-known difficulties of macroeconomic policies under the Stability and Growth Pact, and the more recent Fiscal Compact, including their deflationary nature and the ‘one size fits all problem’ of imposing common deficit requirements on all European Economic and Monetary Union countries. There are also problems with monetary policy in view of the fact that the European Central Bank does not possess the functions of a central bank properly, especially that of lender of last resort. We discuss the reforms that are needed, most important of which is the requirement for a substantial Economic and Monetary Union-level fiscal policy as part of political integration, along with a banking union. In this context the recent proposals of the ‘Five President’s Report’ (European Commission, 2015b; see, also, European Council, 2012) are relevant and the question is whether they will save the euro. It is concluded that the ‘Five President’s Report’ is unlikely to resolve the deep-seated problems, casting a dark shadow over the future of the euro.
External DOI: https://doi.org/10.4337/ejeep.2016.01.04
This record's URL: https://www.repository.cam.ac.uk/handle/1810/253573