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A European Monetary Fund: Why and how?

Daniel Gros, Thomas Mayer, (2017), “A European Monetary Fund: Why and how?”, CEPS Working Paper, 11 December

We argued as early as 2010, at the outset of the sovereign debt crisis, that Europe needs a European Monetary Fund (EMF). In the meantime, the European Stability Mechanism (ESM) has been created, which performs the function of an EMF. It was critical in containing the cost of the crisis and four of its five country programmes have been a success. But the case of Greece shows that one needs to be prepared for failure as well. We propose in this paper to keep the ESM essentially as it is, but would empower it to set conditions on countriesreceiving its financial support. Such support would have a limit, however, to prevent situations in which the ESM would ‘own’ a country.

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