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What Does the 1930s’ Experience Tell Us about the Future of the Eurozone?

Crafts, N. (2014) “What Does the 1930s’ Experience Tell Us about the Future of the Eurozone?“. JCMS: Journal of Common Market Studies, 52: 713–727, Ιούλιος.

 

If the eurozone follows the precedent of the 1930s, it will not survive. The attractions of escaping from the gold standard then were massive and they point to a strategy of devalue and default for today’s crisis countries. A fully federal Europe with a banking union and a fiscal union is the best solution, but it may be politically infeasible. However, it may be possible to underpin the euro with a ‘Bretton Woods Compromise’ that accepts some retreat from deep economic integration and provides greater policy space since exit entails risks of financial crisis that were not present 80 years ago.

 

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