Exit and Enforcement in the Eurozone
Saving the eurozone boils down to persuading its member countries to play by the rules, which requires nudging them toward the realization that doing so is in their best interest. The best way to accomplish this is to establish the ultimate enforcement mechanism: expulsion.
TILBURG – In 1992, the Maastricht Treaty set rules for European countries’ public finances that would facilitate economic integration. The Stability and Growth Pact (SGP), agreed in 1997, extended these rules to enable the euro’s creation and ensure that the new currency became an established part of the global monetary firmament. But the rulebook was left unfinished, with dire consequences: if the euro survives the current crisis, it is destined to remain unstable, except in periods of exceptionally high economic growth – that is, unless Europe’s leaders finish writing the rules.
TILBURG – In 1992, the Maastricht Treaty set rules for European countries’ public finances that would facilitate economic integration. The Stability and Growth Pact (SGP), agreed in 1997, extended these rules to enable the euro’s creation and ensure that the new currency became an established part of the global monetary firmament. But the rulebook was left unfinished, with dire consequences: if the euro survives the current crisis, it is destined to remain unstable, except in periods of exceptionally high economic growth – that is, unless Europe’s leaders finish writing the rules.