26 May 2011

Eurozone Debt Crisis: Reckless debtors or misguided rescuers?

Stefano Micossi

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Based on the latest round of difficulties to emerge from the Greek financial assistance programme, this commentary concludes that there are serious flaws in the design of the eurozone’s crisis management system that periodically push the members to the brink of financial meltdown. He warns that the same is bound to happen again with Ireland and Portugal, and each time with higher risks that the fabric of cooperation within the eurozone will tear irreparably. In order to fix them, he proposes three basic changes to the crisis management arrangements and the design of the European Stabilty Mechanism (ESM) decided in March by the European Council.
Stefano Micossi is Director General of Assonime, the Association of Joint Stock Companies incorporated in Italy; Professor of Economics at the College of Europe, Bruges and member of the CEPS Board of Directors.