Eurozone Crisis and the Future of Europe

The authors uncover the roots of the eurozone crisis, focusing on various approaches on how it can be solved against the backdrop of a very deep financial and economic crisis and its strong social impact. They investigate the recent and future developments in the European Union showing that the financial crisis complicates institutional and policy repair in the EU as well as the stablishment of a lasting economic recovery. The fate of the eurozone underlies the future of the European Union, as any disarray at the core of the EU puts strong destabilizing forces into motion. Budget profligacy is far from explaining the depth of the current crisis in the eurozone; a flawed design and inadequate policy arrangements, which have invited rising imbalances among EU member states, are no less important in explaining the plight of and the disaffection in the eurozone. Even though the Banking Union project will provide a definitive solution to enhancing the cohesion of the eurozone, there are important technicalities and sequencing problems that still need clarification. Further policy arrangements going beyond the operations of a banking union will be needed in order to make the eurozone and EU function properly.