A broad range of economic research papers by leading scholars on the future of EMU concludes that three broad factors contributed to escalating the economic and financial crisis in the euro area.
Authors: Robert Kuenzel and Eric Ruscher
The macro-economic risks inherent in a large, internationally integrated and lightly regulated banking system were largely ignored. A range of emerging macro-economic imbalances and market failures was overlooked, while policy mistakes at the Member State level included imprudent fiscal policy stances in the pre-crisis period.
On the reform options for a deep and more genuine EMU, scholars broadly support the steps taken so far in the EU to overhaul economic governance and accept the need for financial firewalls.
Looking ahead, progress towards a full banking union is recognised as a key priority. While this will also have implications for fiscal integration, ambitious plans for a fiscal union are more controversial.
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