why further eurozone integration could hurt europe s competitiveness
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Why further eurozone integration could hurt Europe’s competitiveness . Europe’s four crises. Financial crisis. Debt crisis. Political crisis. Competitiveness crisis. Bank crisis. The role of the euro. The crisis started in the US but... ...the euro locked it in:

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Presentation Transcript
europe s four crises
Europe’s four crises

Financial crisis

Debt crisis

Political crisis

Competitiveness crisis

Bank crisis

the role of the euro
The role of the euro
  • The crisis started in the US

but...

  • ...the euro locked it in:
    • One-size-fits-all interest rates
    • Perverse incentives
    • Exposed tremendous imbalances
    • Political stalemate
is fiscal banking union the answer
Is fiscal / banking union the answer?
  • “Inexorable logic” of the euro?
  • Joint back stop for banks (deposit guarantee scheme / resolution fund)
  • Fiscal distribution (eurobonds / transfers)
1 can germany afford it
1. Can Germany afford it?

Superman: "Easy, Miss, I've got you."

Lois Lane: "You...you've got me, who's got you?"

2 how to avoid moral hazard in a fiscal banking union
2. How to avoid moral hazard in a fiscal / banking union?
  • Will it be possible to incentivise reforms in a fully fledged fiscal / banking union?
  • How to avoid déjà vu?
  • Berlin’s answer: strict central controls
political crisis 17 national democracies
Political crisis: 17 national democracies
  • 17 national parliaments
  • Electoral cycles
  • Constitutional limitations
  • Public opinion
  • No demos

= Massive risk of political backlash

support for a transferunion
Support for a transferunion?

Sources: Eurobarometer/ZDF

what alternatives
What alternatives?
  • Muddle through: Cash for austerity
  • Transfer-union / bank-union: Who’ll be lender of last resort? Political and economic price?
  • Euro break-up: Greece or more countries?
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