
Contents
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Lessons from history Lessons from history
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The price of rescuing the euro The price of rescuing the euro
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A more sustainable euro system A more sustainable euro system
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And the politics of it And the politics of it
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References References
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4 Rebalancing and Completing the European Monetary Union
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Published:December 2015
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Abstract
Previous attempts at European monetary integration ended up as German-led arrangements with a shrinking membership. With the euro, the stakes are much higher. The biggest international financial crisis since 1929 has transformed itself into an existential crisis of the common currency. Systemic weaknesses of the Maastricht construction feed into individual national failures. Since then, many unthinkables have happened to save the euro, but the price paid has been very high. Europe is divided, the economic strategy flawed, and the politics toxic. Germany has emerged as the indispensable country, while Greece remains the weakest member. We need a more balanced approach combining structural reform with fiscal and monetary measures to boost demand. We also need a new European grand bargain aiming at a more effective and legitimate governance of the euro, while also providing more room for flexibility and differentiation for those who need it, such as the UK.
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