Chapter 11: The euro crisis
The third phase of the global financial crisis (GFC) has been focused on the fears of sovereign default in Europe and the attempts that are being made to manage the problem in ways that will not have an unnecessarily severe impact on the real economy. The structure of Economic and Monetary Union (EMU) in the European Union (EU) has contributed both to the problem and to the difficulty in finding a lasting solution. This experience has revealed fundamental problems in the process of integration and the role of the state. This chapter focuses on the nature of the problem and the plausible ways out – not simply to end this phase of the GFC but to provide a sustainable future path for EMU and continuing integration in Europe and elsewhere round the world. The GFC has emphasised the extent of interconnection among economies through globalisation and the advantages of international cooperation and coordination in the avoidance and management of crises. The common response has been to suggest that either increased integration is required, particularly at the political level, or that some countries should leave the euro area.
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