The 2012 edition of the workshop and this e-book very appropriately raise the question “Governance for the Eurozone: Integration or Disintegration?” The survival of the Eurozone in its current form is as much at stake as it was a year ago and the publication of this< e-book comes at a very timely moment. Once again, the individual chapters cover topics that dominate the political, economic and academic discussion in and on Europe and I think this e-book has the potential to make a significant contribution to the current debates – as much as last year’s e-book did, which was a great success.
While many important changes in the economic governance of the Euro and regarding bail-out mechanisms have been made in the last two years (such as the European semester, the European Financial Stability Facility, the European Stability Mechanism, the Euro Plus Pact and lately the Fiscal pact), we still seem far away from reaching a proper and sustainable solution. The markets were not to be convinced, and while the heavy interventions of the European Central Bank were able to calm the markets for a short while, the crisis is now back in full force. And as much as the markets are not convinced, European citizens and politicians are increasingly uncertain about the benefits the common currency brings and about how far they are willing to reach for a proper design of the Eurozone that tackles the current crisis and prevents future crises. From an economic and political point of view, it seems clear to me that the only way out of this severe crisis is through proper economic governance with a proper fiscal union, but member states seem unable or unwilling to make the needed steps towards this direction.
This e-book describes how such steps and proper economic governance of the Eurozone and its institutions could look. In three sections, the individual chapters consider the role of public financial institutions in dealing with the crisis and discuss the possibilities and limits of fiscal policy support. Furthermore, the various authors reflect on the reform of the political and economic architecture and on the crucial question of how to reform the growth and stability pact and how to construct sound mechanisms for providing liquidity to governments and financial institutions. Finally, the contributions analyse how the European Union and the EU can coexist, whether Europe is developing towards a two-speed Europe and what the consequence of such a development would entail for the governance of the Eurozone. Overall, I think the chapters and their topics concentrate on some of the most crucial elements of the sovereign debt crisis, the future of the Euro and the Union. At the time of writing this foreword, the future looks rather grim and the probability of disintegration” seems to be growing. Unable to form a government after the Parliamentary elections in May, the Greeks are being called to the polling stations again and the prospects of a dramatic exit from the Eurozone are openly discussed. Although Germany and France have repeated - at the first meeting between the new President Hollande and Chancellor Merkel - their willingness to keep Greece in the Euro, words and affirmations are no longer enough and convincing action is needed. At the same time, the successive increases of the public deficit, the ever-growing banking crisis and the rising spreads in Spain, make it increasingly probable that a European intervention will be required to at least recapitalise parts of the Spanish banking system. These events and other problematic ongoing developments make it very difficult to imagine what the situation will be when this e-book is published. However, this publication will certainly provide a very important intellectual contribution to the problems we are facing and to the analysis of the crisis’ implications and the different ways out of the Eurozone crisis.
To conclude, I would like to thank and congratulate the editors of this e-book. The workshop that Professors Elena Carletti, Franklin Allen and Saverio Simonelli organised, and on which this e-book is based, was a huge success in several regards and I can speak for all participants when I say that it was a pleasure to attend this event. The workshop, which was held in the framework of the PEGGED project (Politics, Economics and Global Governance: The European Dimensions) and which was co-organised with the Wharton Financial Institutions Center, brought together leading academics from various disciplines and policymakers and I am very satisfied that the workshop’s presentations and results are being published in this ebook.
Finally, as much as I hope the sovereign debt crisis in the Eurozone will be contained soon, I think the tradition of this workshop should be continued to annually discuss the state and the challenges of the Eurozone. The EUI is certainly the right place to hold such an event. The Institute was created to study the problems of European societies and the construction of Europe at the highest intellectual level. xxviii FOREWORD And without any doubt, the current Eurozone crisis is one of the biggest problems that Europe and its societies are facing today. This means that these past and future workshops contribute to one of the EUI’s core missions by being an excellent example for the European focus of the Institute’s research activities.
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