Summary of We need a European Monetary Fund, but how should it work?

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We need a European Monetary Fund, but how should it work? summary
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Over time, banking and sovereign debt crises have laid bare the original design flaws in the European Monetary Union (EMU), which sorely needed a blueprint to guide the region through financial tumult. According to this cogent essay by economists André Sapir and Dirk Schoenmaker, a transformation of the European Stability Mechanism – by expanding its responsibilities and reforming its governance – into a European Monetary Fund would help close gaps in the EMU edifice. getAbstract recommends this succinct but innovative text to policy analysts and experts.

In this summary, you will learn

  • Why the European Monetary Union lacked appropriate systems to handle regional financial and fiscal crises,
  • What important gaps remain in ensuring economic stability, and
  • How creating a European Monetary Fund could help deal with future crises. 

About the Authors

André Sapir and Dirk Schoenmaker are economists with Bruegel, a European think tank.



The Maastricht Treaty, the foundation for the European Monetary Union (EMU), lacked measures to address bank collapses and sovereign debt failures that could affect the region as a whole. Under the agreement, each member nation would fend for itself in the event it suffered a financial crisis. In this “EMU 1.0,” no provisions addressed liquidity or solvency issues across the group, nor did banks within the region share a process for risk monitoring. 

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