The euro has undoubtedly promoted integration and spurred growth. It has also kept the promise of monetary stability as measured by consumer price inflation. There are some “buts”, however. As regards broader macroeconomic or financial stability, the way in which euro area institutions were set up has in fact very likely contributed to the severity of the crisis. Many people argue that a monetary union can function properly only if accompanied by a true fiscal union. In Finland the federalist agenda is regarded with considerable scepticism.
ETLA’s managing director Vesa Vihriälä argues in the British magazine Government Gazette that a monetary union could function properly even short of a complete fiscal union, and presents five key elements of such an alternative.
Read more in the Government Gazette website.