By Joseph E. Stiglitz
In 2010, the 2008 worldwide monetary trouble morphed into the “eurocrisis.” It has no longer abated. the nineteen nations of Europe that percentage the euro currency—the eurozone—have been rocked through financial stagnation and debt crises. a few nations were in melancholy for years whereas the governing powers of the eurozone have careened from emergency to emergency, such a lot particularly in Greece.
In The Euro, Nobel Prize–winning economist and best-selling writer Joseph E. Stiglitz dismantles the existing consensus round what ails Europe, demolishing the champions of austerity whereas providing a chain of plans which could rescue the continent—and the world—from additional devastation.
Hailed by way of its architects as a lever that will convey Europe jointly and advertise prosperity, the euro has performed the other. As Stiglitz persuasively argues, the crises published the shortcomings of the euro. Europe’s stagnation and bleak outlook are an instantaneous results of the elemental demanding situations in having a various team of nations proportion a standard currency—the euro was once wrong at start, with financial integration outpacing political integration. Stiglitz indicates how the present constitution promotes divergence instead of convergence. The query then is: Can the euro be saved?
After laying naked the ecu primary Bank’s faulty inflation-only mandate and explaining how eurozone rules, particularly towards the main issue international locations, have additional uncovered the zone’s mistaken layout, Stiglitz outlines 3 attainable methods ahead: primary reforms within the constitution of the eurozone and the regulations imposed at the member international locations; a well-managed finish to the single-currency euro scan; or a daring, new method dubbed the “flexible euro.”
With its classes for globalization in a global economic system ever extra deeply attached, The Euro is pressing and crucial interpreting.
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Extra resources for The Euro: How a Common Currency Threatens the Future of Europe
Many have worried that the end of the euro would mean turmoil in Europe and in global financial markets, exacerbating the problems that Europe already faces. That may in fact happen, but it is not necessary: there are ways to end this marriage smoothly, without trauma, and I lay out one such path in chapter 10. If the eurozone chooses this path or is driven to it, dissolution does not require a Europe where each country has its own currency. Several may share the same currency—perhaps the countries of northern Europe or perhaps the countries of southern Europe.
The successes and failures of Europe are seen as lessons for both regional integration and globalization. The problems in achieving a successful monetary union in Europe have dampened enthusiasm elsewhere, for instance in both Africa and Asia, for this form of economic integration. The fundamental insight to glean is that economic integration—globalization—will fail if it outpaces political integration. The reason is simple: When countries become more integrated, they become more interdependent.
These will be years during which suffering mounts, years during which irreversible damage occurs, years during which the promises of the European project are further dashed. In my mind, the consequences of such a course are barely distinguishable from that of muddling through, keeping open the hope of reform in the future to ensure that the euro will not fall apart, but in ways that inflict unconscionable harm on the citizens of countries in trouble. ” This means a choice: (a) implementing the reforms that would make the euro work for all of Europe.