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Repairing the original sin of the European Monetary Union

Author

Listed:
  • Sergio Rossi
  • Bernard Dafflon

Abstract

This study shows that the origins of the sovereign debt crisis within the euro area are to be found within the private sector and in economic policy mistakes rather than only in the profligacy of some national governments in the Southern periphery of Euroland. Sovereign debtors and their private creditors should therefore meet in order for them to arrange a financial package including debt restructuring, rescheduling and cancellation. In this study we argue in favour of a European political union in the form of a federation of states, with its own taxation powers and some financial equalisation transfer mechanisms, to be coupled with a proactive investment policy carried out by the European Investment Bank (EIB) and the issue of euro-bonds to channel global savings into an investment-led European Economic Recovery Plan.

Suggested Citation

  • Sergio Rossi & Bernard Dafflon, 2012. "Repairing the original sin of the European Monetary Union," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 5(2), pages 102-123.
    • Handle: RePEc:ids:ijmefi:v:5:y:2012:i:2:p:102-123
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    Citations

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    Cited by:

    1. Sergio Rossi, 2019. "Rethinking the euro as a common currency for Europe: Keynes's plan revisited," Revista de Economía Crítica, Asociación de Economía Crítica, vol. 27, pages 86-99.
    2. Giuseppe Mastromatteo & Sergio Rossi, 2015. "The economics of deflation in the euro area: a critique of fiscal austerity," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(3), pages 336-350, July.
    3. Sergio Rossi, 2012. "The monetary–structural origin of TARGET2 imbalances across Euroland," Chapters, in: Claude Gnos & Sergio Rossi (ed.), Modern Monetary Macroeconomics, chapter 8, pages 221-238, Edward Elgar Publishing.

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