Sovereignty, exchange rate and the Euro crisis

Luiz Carlos Bresser-Pereira () and Pedro Rossi ()

No 371, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: This paper presents an interpretation of the European crisis based on the balance of payments imbalances within the Eurozone and highlighting the role of the 'internal' real exchange rates as a primary cause of the crisis. It explores the structural contradictions that turn the Euro into a 'foreign currency' for each individual Eurozone country. These contradictions imply the inability of national central banks to monetize the public and private debts, which makes the Euro crisis a sovereign crisis similar to those typical of emerging countries, but whose solution presents additional obstacles.

Date: 2014-10-29
New Economics Papers: this item is included in nep-cba, nep-eec and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:371

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