\nThe difficulties facing Greece and other European borrowers expose two big failures of discipline at the heart of the euro zone. The first is a failure to encourage member governments to maintain control of their finances. The second, and more overlooked, is a failure to allow for an orderly sovereign default. To address these issues, we propose a new euro-area institution, which we dub the European Monetary Fund (EMF). Although the EMF could not be set up overnight, it is not too late to do so. Past experience (with Argentina, for instance) suggests that the road to eventual sovereign insolvency is a long one.<\/p>\n
The EMF could be run along similar governance lines to the IMF, by having a professional staff remote from direct political influence and a board with representatives from euro-area countries. Just as the existing fund does, the EMF would conduct regular and broad economic surveillance of member countries. But its main role would be to design, monitor and fund assistance programmes for euro-area countries in difficulties, just as the IMF does on a global scale…<\/p>\n<\/blockquote>\n
Beginning today and running through the weekend, Free Exchange will be hosting a roundtable discussion of the piece, featuring contributions from experts on global finance. We hope you’ll follow along and add your own thoughts in comments.<\/p>\n","protected":false},"excerpt":{"rendered":"
THE crisis in the euro zone continues, as European nations, EU institutions, world markets, and other players (among them the IMF) play an elaborate and dangerous game of financial chicken. The potential for a damaging default (or defaults) and significant stresses on the single currency is real, but as yet, no widely acceptable solution has […]<\/p>\n","protected":false},"author":4534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-336305","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/336305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=336305"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/336305\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=336305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=336305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=336305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"\"](\"http:\/\/media.economist.com\/images\/20100220\/201008FNP001.jpg\")
THE crisis in the euro zone continues, as European nations, EU institutions, world markets, and other players (among them the IMF) play an elaborate and dangerous game of financial chicken. The potential for a damaging default (or defaults) and significant stresses on the single currency is real, but as yet, no widely acceptable solution has come to the fore. The lack of consensus is particularly unfortunate given that many saw the possibility of this sort of crisis long ago, at the very inception of the euro area.<\/p>\n