Sovereignty, the exchange rate, collective deceit, and the euro crisis

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

Journal of Post Keynesian Economics, 2015, vol. 38, issue 3, 355-375

Abstract: This paper presents an interpretation of the European crisis based on balance-of-payments imbalances within the Eurozone, 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: 2015
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DOI: 10.1080/01603477.2015.1087807

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