You are here: Home Knowledge Base Designing a Stable Euroland: The Corporate Perspective Solutions Strengthen common political institutions in the eurozone
Symposium 2013

Solution for Designing a Stable Euroland: The Corporate Perspective

The Challenge

It is obvious by now that the German economy is not immune to the on-going crisis: A severe drop in exports to the rest of the euro zone is hurting manufacturing. At the same time a combination of lar ...

It is obvious by now that the German economy is not immune to the on-going crisis: A severe drop in exports to the rest of the euro zone is hurting manufacturing. At the same time a combination of large-scale immigration and of capital inflows makes Germany look like a beneficiary of the gloom elsewhere. While the negative economic effects have so far been largely offset by rising domestic demand and exports to countries outside Europe, the longer-term consequences of the crisis may be severe: Economically, Germany will have difficulties to strive in a Europe in perma-crisis. Politically, Germany faces adverse reactions for the austerity it imposes on weaker partner countries.

Strengthen common political institutions in the eurozone

Political accountability is key to designing a stable eurozone. Strict enforcement of eurozone rules is essential, but a new balance between common institutions and national sovereignty will have to be struck. Transfers and guarantees between member states will have to be limited in size. Still, enhanced transfer mechanisms may be needed to achieve long-term stability of monetary union.

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