Rebalancing the Euro Area: A Proposal for Future Reform
The current levels of public debt in several eurozone countries reflect the euro’s institutional flaws and may threaten the future of the common currency. In this paper by the
Wilfried Martens Centre for European Studies, Juan Castañeda proposes a new institutional arrangement to restore fiscal discipline in the euro area. This would require changes to the architecture of the zone so that member states would need maintain sound fiscal policies. Overspending economies would have to pay the financial cost of accessing extra euros, which would deter the accumulation of internal imbalances in the eurozone. These reforms would help reduce fiscal and macroeconomic imbalances in the euro area, and make the euro a stronger currency over the long term, while reducing the need for further regulation.
https://www.martenscentre.eu/sites/default/files/publication-files/euro-area-reform.pdf
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