EU Strategy on the Governance of the Euro Area

Abstract

The crisis which initiated in the housing market of the USA in 2007 has since spread to the world financial system and the real economy. The crisis in the banking system climaxed in September 2008 and spread to Europe. Most economies experienced negative rates of growth, the unemployment continues on the increase, a number of financial giants have closed or are having severe problems; the private consumption and investment have shrunk because of uncertainty and reductions in the value of financial assets. The global financial crisis has shown fundamental weakness in the fiscal and monetary policies in the Eurozone. The sovereign debt crisis in the euro area during the spring of 2010 has revealed that the monetary and fiscal policy framework of the European Monetary Union (EMU) is still incomplete. In this paper a number of questions with respect to the current economic crisis are analyzed: What measures have been taken by the European authorities to confront the debt crisis in the Eurozone? What is the role of European Central Bank? What kind of changes does the current crisis lead to in the legal and institutional basis of European integration?

An earlier version of this paper was presented at the Conference on ‘Rethinking the Grand Strategy of the European Union’, Loughborough University, 24–26 May, 2012.