Brief
European guarantees to get out of the crisis?
In order to re-establish financial stability in the eurozone and to prevent any further crises, the EMU countries must find solutions to each of these two crises and break the link between them. The question of a sharing of the risk linked to public indebtment and of the risk linked to the banking industry is at the heart of these two steps forward. This Policy Brief by Sofia Fernandes aims at setting out to debate the terms on which such European guarantees can be made in the short and medium-to-long term.
The difficulties that the eurozone has been facing since 2010 have made it quite clear that the eurozone suffers from a structural weakness caused by the interdependence of the banking and sovereign debt crises. In order to re-establish financial stability in the eurozone and to prevent any further crises, the EMU countries must find solutions to each of these two crises and break the link between them. To this end, member states must adopt a roadmap leading to the implementation of a fiscal and banking union within the eurozone.
But are member states ready to accept greater solidarity within the group, which would translate into a sharing of the risk linked to public indebtment – through the issuance of common bonds – and of the risk linked to the banking industry – through the creation of a European fund for the resolution of banking crises?
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