Forum: Eight Months Later – Has the Eurozone Been Stabilised or Will EMU Fall Apart?

Eight months ago, as the risk of sovereign default in Greece first emerged, the Intereconomics Forum invited a number of contributors to examine the options available to EU policymakers. As the threats to European Monetary Union resurface now, six of the same authors return in this issue’s Forum to reassess the situation, in particular with regard to the EU’s recent policy responses to the ongoing crisis.

Whereas both optimists and pessimists could support their views with strong arguments eight months ago, the EU’s current predicament has shifted the prevailing sentiment strongly toward the pessimistic view. From the Irish bailout to the precarious status of Portugal, not to mention the potentially disastrous situation looming in Spain, our contributors are uncertain whether EU policymakers are up to the challenge of defending the euro. As evidence of this, several point to the EU Council’s October 2010 decision to establish a permanent crisis resolution mechanism to ensure an orderly state insolvency procedure, which did little to calm markets. Nonetheless, most of these economists still see ways for the EU to escape the crisis without being forced to abandon the common currency.

The articles in the Forum are:

+ Wim Kösters: Credible Rules, Not Discretion, Will Make the Euro Sustainable

+ Paul De Grauwe: A Mechanism of Self-destruction of the Eurozone

+ Daniel Gros: The Euro Sovereign Crisis: The Difficult Transition to Private Sector Involvement

+ Waltraud Schelkle and Deborah Mabbett: The Van Rompuy Reforms: Type 1 and Type 2 Errors and One Small Bright Spot

+ Desmond Lachman: Europe Fiddles as its Periphery Burns

Intereconomics: Archive http://archive.intereconomics.eu/years/

ESO: Background information: Forum: Challenges Facing European Monetary Union http://www.europeansources.info/record/forum-challenges-facing-european-monetary-union/

---