Avoiding Another Crisis in the Euro Area: Public and Private Imbalances and National Policy Responses

• Autores: G. Russell Kincaid, Max Watson
• Localización: Revue d'integration europeenne= Journal of european integration, ISSN 0703-6337, Vol. 37, Nº 7, 2015, págs. 787-801
• Idioma: inglés
• Enlaces
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• Resumen

  • Early critics of the euro’s design pointed to the disruptive potential — both political and economic — of country-specific shocks in a monetary union that is a far cry from an optimal currency area. The euro crisis has confirmed the risks associated with a ‘one-size-fits-all’ monetary policy, decentralized financial supervision, and inadequate fiscal backstops. This article examines how the active use of national fiscal policies and macroprudential policies can mitigate these risks. Cross-border coordination of macroprudential policies is essential to ensure their effectiveness. In addition, area-wide reforms are necessary including a more complete banking union with a well-funded common backstop.