Reconciling risk sharing with market discipline: A constructive approach to euro area reform

Benassy-Quere, A, Brunnermeier, M, Enderlein, H, Farhi, E, Fuest, C, Gourinchas, P-O, Martin, P, Pisani-Ferry, J, Rey, H, Schnabel, I, Veron, N, Weder di Mauro, B and Zettelmeyer, J (2018) Reconciling risk sharing with market discipline: A constructive approach to euro area reform. Discussion Paper. Centre for Economic Policy Research.

Abstract

The euro area continues to suffer from critical weaknesses that are the result of a poorly designed fiscal and financial architecture, but its members are divided on how to address the problems. This paper proposes six reforms which, if delivered as a package, would improve the euro area?s financial stability, political cohesion, and potential for delivering prosperity to its citizens, all while addressing the priorities and concerns of participating countries.