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CIAO Focus, March 2015: Reforming the Eurozone
The introduction of the euro was one of the most important steps in the European integration process. The eurozone crisis has shown, however, that the EU’s Economic and Monetary Union (EMU) had several flaws in its design. Over the past years, an important reform process has taken place, which is likely to continue in the future.
The question can be raised: “what does the future hold for the eurozone?” The answer to this question will depend to a large extent on the policy choices that will be made during the European Parliament’s 2014-2019 term. In this respect, the 2014 European elections will matter a great deal for the future shape and strength of the EMU.
A wide range of possible reforms of the eurozone has been advocated since the outbreak of the sovereign debt crisis. Some are pessimistic about the ability of certain countries to recover from the crisis and advocate a eurozone break-up, judging the common currency a failed experiment. More optimistic voices believe the eurozone should instead move forward, by mending its birth defects. Where most agree is that maintaining the architecture of the EMU in its present fragile state would leave it vulnerable to future crises.
Besides calls for reforms to make the eurozone sustainable in the long-term, policymakers will also be faced with the need for short-term decisions to genuinely exit the ongoing crisis. Fiscal and macroeconomic imbalances will have to be addressed, and additional solidarity might be needed to cope with the severe social toll in the countries most hit by the crisis. Insufficient economic growth or renewed periods of crisis could complicate the situation even further.
--Xavier Vanden Bosch & Stijn Verhelst, EGMONT-The Royal Institute for International Relations
From the CIAO Database:
Outside Sources: *
Eurozone Crisis (The Guardian)
Euro in Crisis (Financial Times)
Anatomy of the Euro Crisis (Harvard Magazine)
The Eurozone in Crisis (Council on Foreign Relations)
* Outside links are not maintained. For broken outside links, CIAO recommends the Way Back Machine.