Book contents
- Frontmatter
- Contents
- Figures
- Tables
- Boxes
- Contributors
- Abbreviations and acronyms
- 1 Introduction
- 2 Towards a new architecture for financial stability in Europe
- Part I The experience of the crisis
- Part II Accession to the euro area
- Part III The future of the euro area
- 11 Why the current account may matter in a monetary union: lessons from the financial crisis in the euro area
- 12 National fiscal rules within the EU framework
- 13 The road to better resolution: from bail-out to bail-in
- 14 Financial stability and monetary policy: lessons from the euro area
- 15 Is there a case for price-level targeting?
- 16 Heterogeneity in the euro area and why it matters for the future of the currency union
- 17 The euro area: how to regain confidence?
- 18 How to regain confidence in the euro area?
- 19 How to save the euro? Lessons from the US
- Index
18 - How to regain confidence in the euro area?
from Part III - The future of the euro area
Published online by Cambridge University Press: 07 October 2011
- Frontmatter
- Contents
- Figures
- Tables
- Boxes
- Contributors
- Abbreviations and acronyms
- 1 Introduction
- 2 Towards a new architecture for financial stability in Europe
- Part I The experience of the crisis
- Part II Accession to the euro area
- Part III The future of the euro area
- 11 Why the current account may matter in a monetary union: lessons from the financial crisis in the euro area
- 12 National fiscal rules within the EU framework
- 13 The road to better resolution: from bail-out to bail-in
- 14 Financial stability and monetary policy: lessons from the euro area
- 15 Is there a case for price-level targeting?
- 16 Heterogeneity in the euro area and why it matters for the future of the currency union
- 17 The euro area: how to regain confidence?
- 18 How to regain confidence in the euro area?
- 19 How to save the euro? Lessons from the US
- Index
Summary
How can we strengthen public confidence in the euro project following the Greek public debt crisis? To do so, it is crucial to remove the risk of a full-blown sovereign debt crisis, which could easily trigger a banking crisis, in the euro area. This requires us to resolve the conflict between national fiscal policy and supra-national monetary policy by reinforcing the institutions underpinning fiscal policy.
To my mind, three sets of measures need to be adopted: we need to strengthen the Stability and Growth Pact (SGP); we must ensure that fiscal policy is subject to stringent surveillance and supervision; and we have to make sure that there is a permanent and credible crisis resolution mechanism that provides incentives for investors not to lend, and for governments not to borrow, excessively.
- Type
- Chapter
- Information
- The Euro Area and the Financial Crisis , pp. 335 - 339Publisher: Cambridge University PressPrint publication year: 2011