“When everyone is responsible for everything, nobody responsible for anything.”The current calm is deceptive . It's the calm before the storm. The problems of the euro are not resolved. It threatens monetary policy further heavy seas. A few hasty corrections Brussels deep in the night will not help.The euro is a political project and the policy whistles to economics. However, he will only survive if the political project is put on a sound economic basis. That makes three things necessary: First, the economic statics of the Euro project to be readjusted. Errors must be corrected, overlooked factors. Second, fiscal birth defects will be corrected. The trend toward centralization has broken, the pressure on the European Central Bank will be mitigated. Third needs to be decided who has to do in Europe what economic policy tasks. This should apply: competition going on Coordination.
The architecture of the Euro
The European Monetary Union is constructed relatively easily. The economic policy assignment is asymmetrical, it is based on three basic building blocks. 1) All economic policies only monetary policy is centralized. Their goal is price stability and nothing else. The support of this policy is politically independent ECB. 2) All other economic policies are decentralized. The actors are national governments and social partners. You are responsible for employment and economic growth. 3) The autonomous national fiscal policies should be kept by the Stability and Growth Pact, and the no-bail-out clause in check. This should keep that out of hand, and national fiscal policies set the stability-oriented monetary policy of the ECB under pressure. The concept of economic policy in EMU is so rule-bound and stability-oriented.
This architecture is the
€ unusual and challenging. The wage and price policy, the main burden of exogenous shocks. An adaptation of expansionary national fiscal policies is only possible within limits, the central monetary policy alone is the price-level stability in the euro area required. Thus bear the major responsibility for collective bargaining and employment growth. You need for flexible wages and wage structures, and provide mobile working. This burden is exacerbated because there are no mechanisms in EMU, which help loads of exogenous shocks, at least temporarily cushion financially. In EMU, there is no revenue sharing between the countries have centralized systems of social security, on a Europe-wide financial compensation would be possible with shocks. Not surprisingly, therefore, that the German trade unions are the most avid supporters of the euro.
Construction defects and faulty static
Construction of a “currency without a state” is risky. She makes high demands on private and state actors. The fathers of the euro would discipline the public debt. They had only the case in which, states that live beyond their means. The SWP and the no-bail-out clause should protect yourself. Not in the view they had a case where that debt “systemically important” financial institutions irresponsible to the hilt. Of private debt in the crisis were then promptly government debt. Prior to protect the fiscal firewalls EMU not. Could help one designed as a “Pigovian tax” levy on banks, higher capital requirements and competition policies, the unbundling. The banking lobby, however, was probably successful. None of these measures is to forward the reform agenda of the euro.
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