EU policies

Mike Wickens, 08 June 2016

This second column in a two-part series takes a closer look at the proposals in the Five Presidents’ Report for Fiscal, Banking, and Capital Markets Unions and much closer political integration among Eurozone countries. It goes on to give evidence of the failure of financial markets to price risk correctly prior to the Eurozone Crisis. By pricing risks better, financial markets may be able to provide the discipline required to avoid future crises in the Eurozone without the need for greater political interference in national fiscal policy-making as proposed in the Report. 

Mike Wickens, 07 June 2016

European Monetary Union was designed to promote economic growth, price stability, full employment, and political integration. It can be argued that so far, it has achieved none of these and has in fact made things worse.  The Five Presidents' Report contained a set of proposals for making the single currency sustainable, based on giving up more national independence. This column – the first in a two-part series asking whether future crises might be avoided through market forces without the need for the sort of procrustean proposals offered in the Report – examines the causes of the Eurozone Crisis.

Stefano Micossi, Ginevra Bruzzone, Miriam Cassella, 06 June 2016

Following the financial crisis, the EU banking system is still plagued by widespread fragilities. This column considers the tools and legal provisions available to EU policymakers to address moral hazard and incentives encouraging excessive risk-taking by bankers. It argues that the new discipline of state aid and the restructuring of banks provide a solid framework towards these ends. However, the application of new rules should not lose sight of the aggregate policy needs of the banking system. 

Giancarlo Corsetti, Lars P Feld, Ralph S.J. Koijen, Lucrezia Reichlin, Ricardo Reis, Hélène Rey, Beatrice Weder di Mauro, 27 May 2016

Europe has failed to design institutions robust enough to weather difficult times, as the sovereign debt and refugee crises prove. This column introduces CEPR’s new Monitoring the Eurozone report, Reinforcing the Eurozone and Protecting an Open Society, which argues that coordinated actions are urgently needed. The institutional changes proposed by the authors are politically feasible and would help restore prosperity to the Eurozone.

Giancarlo Corsetti, Lars P Feld, Ralph S.J. Koijen, Lucrezia Reichlin, Ricardo Reis, Hélène Rey, Beatrice Weder di Mauro, 27 May 2016

The large wave of refugees arriving from the Middle East and Northern Africa is one of the major challenges facing the EU today. In this column, the authors of the 2nd Monitoring the Eurozone report outline their proposal for one measure to help deal with the refugee crisis – EU refugee bonds. EU-wide bonds are an appropriate way to finance the response to the crisis due to the immediate costs for some countries and the future benefits for others of integrating refugees.

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