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Avoiding Another Crisis in the Euro Area: Public and Private Imbalances and National Policy Responses.

Authors :
Kincaid, Russell
Watson, Max
Source :
Journal of European Integration. Nov2015, Vol. 37 Issue 7, p787-801. 15p.
Publication Year :
2015

Abstract

Early critics of the euro’s design pointed to the disruptive potential — both political and economic — of country-specific shocks in a monetary union that is a far cry from an optimal currency area. The euro crisis has confirmed the risks associated with a ‘one-size-fits-all’ monetary policy, decentralized financial supervision, and inadequate fiscal backstops. This article examines how the active use of national fiscal policies and macroprudential policies can mitigate these risks. Cross-border coordination of macroprudential policies is essential to ensure their effectiveness. In addition, area-wide reforms are necessary including a more complete banking union with a well-funded common backstop. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
07036337
Volume :
37
Issue :
7
Database :
Academic Search Index
Journal :
Journal of European Integration
Publication Type :
Academic Journal
Accession number :
110591546
Full Text :
https://doi.org/10.1080/07036337.2015.1079374