A New Start for the Eurozone: Dealing with Debt - Giancarlo Corsetti, Lars P Feld, Philip R. Lane, Lucrezia Reichlin, Hélène Rey, Dimitri Vayanos, Beatrice Weder di Mauro

Wednesday, April 15, 2015

Recent Eurozone growth has been sporadic and hesitant, and confidence in the recovery is marred by concerns over returning financial instability and long periods of little or no growth. These problems are rooted further back in the Eurozone’s history than the recent crisis, and the authors of this report, the first in the Monitoring the Eurozone series, call for a reconsideration of the Eurozone’s architecture itself. They focus on three key points where improvements can be made without a Treaty change or the creation of a “fully-fledged fiscal federation”: a one-time debt stock operation to quickly cut sovereign debt; a strengthened sovereign lending structure for the European Stability Mechanism; and the arrangement of changes in regulation that discourage and limit the exposure of banks to sovereign debt.

The newly created European Council of Economic Experts, a CEPR initiative, has taken on the ambitious task of producing a cohesive analysis of the Eurozone and its future in the Monitoring the Eurozone series. The Council is a group of academics, from diverse national backgrounds, who come together to forge common analysis of problems of the Eurozone and to propose workable solutions. This first report represents months of careful deliberation of the data, and draws together a previously fragmented discussion of the real challenges Europe faces in its recovery. CEPR is delighted to support this initiative.

The report is available for download here.