Lessons into Policy: Framework for Managing Fiscal Crises in the EMU

The risk of rising account imbalances following the financial crisis of 2007-2009, and the gravity of the fiscal situation in Greece has sparked a debate for improving the fiscal framework of the European Monetary Union to better manage similar crises in the future. While the range of reform proposals varies from marginal improvements of the existing framework to the introduction of a new explicit framework, it is certain that this issue cannot be put on hold.  A framework must be developed to avoid recurrent bailouts that would undermine the stability of the monetary union and ensure that enhanced cooperation does not damage the internal market of the EU. 

Read more about the spectrum of policy options and what reform means for future governance and economic convergence of the EU in CASE Network Studies and Analyses No. 412 “The Sustainability of Public Finances and Fiscal Policy Coordination in the EMU” by Juergen von Hagen.