20 years of the German euro are more than enough

Jörg Bibow

Revista de Economia Critica, 2019, vol. 27, 32-46

Abstract: This paper reviews the performance of the euro area since the euro's launch 20 years ago. It argues that the euro crisis has exposed existential flaws in the euro regime. Intra-area divergences and the corresponding buildup of imbalances had remained unchecked prior to the crisis. As those imbalances eventually imploded, member states were found to be extremely vulnerable to systemic banking problems and abruptly deteriorating public finances. Debt legacies and high unemployment continue to plague euro crisis countries. Its huge current account surplus highlights that the euro currency union, toiling under the German euro and trying to emulate the German model, has become very vulnerable to global developments. The euro regime is flawed and dysfunctional. Europe has to overcome the German euro. Three reforms are essential to turn the euro into a viable European currency. First, divergences in competitiveness positions must be prevented in future. Second, market integration must go hand in hand with policy integration. Third, the euro is lacking a safe footing for as long as the ECB is missing a federal treasury partner. Therefore, establishing the vital treasury–central bank axis that stands at the center of power in sovereign states is essential.

Keywords: Euro; Euro Crisis; Banking Crisis; Debt Crisis; Monetary Policy; Lender of Last Resort; Fiscal Policy (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://revistaeconomiacritica.org/index.php/rec/article/view/221/205

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ret:ecocri:rec27_04

Access Statistics for this article

More articles in Revista de Economia Critica from Asociacion de Economia Critica Contact information at EDIRC.
Bibliographic data for series maintained by Universidad Pablo de Olavide, Biblioteca-CRAI, Servicio de Publicación Digital ().