The problems in the Eurozone are not a side effect of the Global Crisis but rather date back to the Maastricht treaty. This chapter proposes a few possible remedies. First, it is necessary to make debt restructuring possible within the Eurozone. In particular, the risk loop between sovereigns and banks needs to be stopped through more diversified balance sheets. The second suggestion involves more shared sovereignty, not only for debtor countries, but also for creditors. At a minimum, the Eurozone needs a fiscal backstop for its banking union.
Agnès Benassy-Quéré, 07 September 2015
Kaushik Basu, Joseph Stiglitz, 02 January 2014
The Eurozone crisis exposed weaknesses in the Eurozone’s design. This column – by Nobelist Joe Stiglitz and World Bank Chief Economist Kaushik Basu – argues that the Eurozone’s financial architecture can be improved by amending the Treaty of Lisbon to permit appropriately structured cross-country liability for sovereign debt incurred by EZ members.
Hans-Werner Sinn, 22 June 2007
Seigniorage is generated when a central bank creates money and gives it to the private sector in exchange for interest-bearing assets. Under the Maastricht Treaty, the interest earnings are distributed according to country size, but given the dominant role of the DM before the euro, this allocation rule cost Germany about €30 billion.