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

CEPR Policy Insight No 91

Agnès Bénassy-Quéré, Markus K Brunnermeier, Henrik Enderlein, Emmanuel Farhi, Marcel Fratzscher, Clemens Fuest, Pierre-Olivier Gourinchas, Philippe Martin, Florence Pisani, Hélène Rey, Nicolas Véron, Beatrice Weder di Mauro, Jeromin Zettelmeyer

he 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.