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The Time is Right for a European Monetary Fund

Andre Sapir, Dirk Schoenmaker, (2017), “The Time is Right for a European Monetary Fund”, Bruegel Policy Brief, Isuue 4, Οκτώβριος

The creation of the European Stability Mechanism (ESM) and the banking union were instrumental
in stemming the euro-area sovereign crisis. However, both remain incomplete. While the ESM reduces the risk of sovereign debt crises, it still lacks an instrument to deal in an orderly way with insolvency crises. This makes the no-bailout clause of the Maastricht Treaty toothless. Two of the banking union’s pillars – common European supervision by the European Central Bank and common European resolution by the Single Resolution Fund – are up and running. But the third, common European deposit insurance, is still missing. Furthermore, the governance of the ESM is wanting. Decisions to provide financial assistance are taken by unanimity, preventing swift crisis response when it is needed.

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