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https://doi.org/10.3917/reof.1...
Article . 2013 . Peer-reviewed
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EconStor
Research . 2012
Data sources: EconStor
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The European Monetary Fund

A systemic problem needs a systemic solution
Authors: Stephan Schulmeister;

The European Monetary Fund

Abstract

The deepening of the debt crisis in the euro area is due to three systemic causes which national governments are not able to overcome on their own. First, being members of a monetary union euro states cannot reverse the rise in public debt (caused by the financial crisis 2008) through devaluations. At the same time, they have no access to funds from a national central bank. Second, under "finance-capitalistic" framework conditions, speculators systematically exploit and strengthen the fiscal troubles in the weakest countries by driving up CDS premiums and interest rates to unsustainable levels. This (potentially) transforms a liquidity crisis into a solvency crisis. Third, these speculative activities widen the interest rate differentials within the euro area drastically thereby endangering the economic and political cohesion of the EMU and even of the EU. A systemic solution which restores the primacy of politics over speculation needs to stabilise interest rates for all euro countries. It is proposed to transform the European Financial Stability Facility (EFSF) into the European Monetary Fund (EMF). It would provide euro governments with financial means by selling Eurobonds. These bonds are guaranteed by all euro countries to an unlimited extent. The EMF would stabilise Eurobond interest rates at a level slightly below the level of medium-term economic growth (in nominal terms). The Eurobonds are held by investors with the EMF, they are not tradable but can be liquidated at any time. The EMF helps to restore sound public finances in euro countries in close cooperation with the ECB, the European Commission and national governments. To this end, the EMF provides funds for the euro states according to clear criteria ("conditionality") which are not exclusively restrictive.

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Keywords

ddc:330, Öffentliche Schulden, Staatsbankrott, Haushaltskonsolidierung, EU-Staaten, Eurozone, Internationaler Kredit, euro crisis, Monetary Union, dynamic budget constraint, finance capitalism, jel: jel:E00, jel: jel:F33, jel: jel:G28

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    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    5
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Top 10%
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
5
Average
Top 10%
Top 10%
bronze