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The Euro-debt crisis: what future for the euro zone? Greece vs Germany and the reform of the EMU

This final dissertation aims to explain the recent euro-debt crisis as a failure of the original Economic and Monetary Union (EMU), viewed as a system based on the German ordoliberal model. What is clear is that on the one hand Europe is still composed of different economic cultures not converging into one and that on the other hand the current EMU was not built to deal with such a crisis. Thus, while with its internal fiscal imbalances Greece was for sure the “sick man” of the euro zone and the most vulnerable country when the financial crisis moved to Europe, it is not only a problem of a fragile state inside a currency union. The “sick man” soon became the whole EMU, not able to manage and resolve the Greek crisis and to stop the contagion towards Spain, Portugal and Ireland, and possibly and more worryingly, Italy. In addition, the euro zone found itself lost without its expected leader and “benign hegemon” (Morisse-Schilbach, 2011, p. 36) Germany, led by a Chancellor, Angela Merkel, more concerned about her national interests, as any other EU member state's representative, than about the responsibilities that the economic and political role Germany has within the EU entails. What is strongly recommended is a reform of the EMU system and a better definition of its governance. A good way to start could be following the idea of Pisani-Ferry, according to whom the four original objectives, entirely based on the German economic model- 1) price stability; 2) budgetary discipline; 3) financial stability; and 4) avoidance of macroeconomic imbalances- must be rediscussed in order to build a new EMU. A crucial aspect for the future of the euro zone will be, again, the role and contribution of Germany in this highly needed reform process, or the extent to which it will continue to fill national populist fears about the costs that the euro crisis will have on Germans.

Mostra/Nascondi contenuto.
INTRODUCTION Preamble on the euro-debt crisis The project of creating a common currency has always been a European dream since the 1950s, as one of the last steps of the ideal United States of Europe (USE) – and even at present the European Union (EU) seems so far from a real possibility of being transformed into the USE. With the end of the Bretton Woods' system some experiments, such as the currency snake and the European Currency Unit (ECU), prepared the course of the euro 1 , finally introduced with the Maastricht Treaty (July 1992), considered by many as a “compromise between Germany and France” (Mamadouh, Van Der Wusten, 2010, p. 111). In the negotiations that gave birth to the euro, both France and Germany seemed to prevail if compared to the other countries of the club. In particular, the reunified Germany of Helmut Kohl did all its best to win the dispute with the French and was soon identified as the main leader of the EMU. Not only the new European Central Bank (ECB) was placed in Frankfurt, but also it was “modeled after German Central Bank preference” (Mamadouh, Van Der Wusten, 2010, p. 111), by recalling the principles of Central Bank Independence (CBI) and Price Stability, with a typical German inflation control policy and with “the interdiction of monetizing public debt” (Proissl, 2010, p. 1). It is fundamental to remember that despite the fact that the French had initially tried to introduce the “gouvernment économique” clause in the treaty (see Art. 99), only a general framework of economic coordination was provided. While monetary policy was designed as federal, fiscal policies remained in the hands of nation states, in the assumption that “fiscal policies should not jeopardize monetary policy goals” (Maior, 2010, p. 5); the German model was finally completed by the “no bailout clause” (see Article 103, section 1: “The Community shall not be liable for or assume the commitments of central 1 The euro was introduced on January 1,1999, as an accounting currency, that replaced the old ECU. In a second moment, starting from January 1, 2002, the euro started to circulate. At present seventeen EU member states have adopted the euro. They are: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. 7

Tesi di Master

Autore: Anna Codazzi Contatta »

Composta da 50 pagine.


Questa tesi ha raggiunto 440 click dal 19/11/2012.

Disponibile in PDF, la consultazione è esclusivamente in formato digitale.