Creating a monetary union without a fiscal union was a grievous macroeconomic mistake. For example, it allowed countries like mine (Germany) to abuse the shared currency to artifically lower the cost of exported goods, with the downstream effect of allowing it to “move” parts of its state debt to others, like e.g. France.
There really are only two ways towards eventual stability: Create a fiscal union (which for all intents and purposes means turning the EU from a confederation into a sovereign state), or breaking up the monetary union.
The latter, however, would destroy large parts of the export-dependent German economy almost overnight. It would almost certainly lead to economic suffering not seen since the Great Depression in the short-term. To steelman the argument for a moment, it could theoretically be a (state-)controlled burn to purge all those ailing German big corporations almost exclusively dependent on fossil fuels that have been refusing to innovate for more than 30 years now and be the catalyst for a rapid green transition. But there’s 0% chance of any far-right party desiring this, let alone being able to pull it of.
So that means either we create a fiscal union, or we’re screwed with a monetary system that will continue to amplify existing problems, instead of being a tool capable of addressing them equitably.
My two cents:
Creating a monetary union without a fiscal union was a grievous macroeconomic mistake. For example, it allowed countries like mine (Germany) to abuse the shared currency to artifically lower the cost of exported goods, with the downstream effect of allowing it to “move” parts of its state debt to others, like e.g. France.
There really are only two ways towards eventual stability: Create a fiscal union (which for all intents and purposes means turning the EU from a confederation into a sovereign state), or breaking up the monetary union.
The latter, however, would destroy large parts of the export-dependent German economy almost overnight. It would almost certainly lead to economic suffering not seen since the Great Depression in the short-term. To steelman the argument for a moment, it could theoretically be a (state-)controlled burn to purge all those ailing German big corporations almost exclusively dependent on fossil fuels that have been refusing to innovate for more than 30 years now and be the catalyst for a rapid green transition. But there’s 0% chance of any far-right party desiring this, let alone being able to pull it of.
So that means either we create a fiscal union, or we’re screwed with a monetary system that will continue to amplify existing problems, instead of being a tool capable of addressing them equitably.