Abstract
This chapter explores the economic problem facing the EU, namely the crises of the Eurozone, and its inability to promote economic growth in the wider single market. Here, we go back to the political and economic foundations of the Euro in the Maastricht Treaty, the creation of a “two-tier” EU and the background of the European debt crisis—with its epicentre in Greece. We also look at the default threat of Italy and the new efforts to bolster the Eurozone and the single currency in the light of the past and ongoing debt problems.
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M. Feldstein. (1997). “EMU and International Conflict”, Foreign Affairs, 76, pp. 60–74.
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In 1999, the Euro replaced 11 national currencies and today 19.
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The euro area today (the region composed of countries in the European Monetary Union or EMU) has nominal gross domestic product (GDP) of roughly $13.8 trillion, making it the second-largest economic bloc in the world after the USA.
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Dr. D. Syrrakos an expert on Eurozone economics is a member of Future Economies University Research Centre at Manchester Metropolitan University interviewed on 16 and 23 June 2019.
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The contagion factor of non-Italian banks’ credit exposure to Italy, as of June 2018: France 285B, Germany 58.78B, Belgium 25.2B, Spain 21.4B and the UK 17.4B.
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Ec.europa.eu, 22 June 2015.
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Alan Greenspan. (1999). “Do Efficient Financial Markets Mitigate Financial Crises?”, Remarks at the 1999 Financial Markets Conference of the Federal Reserve Bank of Atlanta, Sea Island, Georgia.
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Cyprus and the Financial Crisis—The Controversial Bailout and What It Means for the Eurozone. London, Palgrave Macmillan (2015).
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B. Eichengreen. (2019). “Two Views of the International Monetary System”, Inter-economics 54, no. 4, pp. 233–236.
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Struggling trade talks between USA and EU renew the threat of tariffs on European cars.
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The term was coined by a former minister of Finance Valery Giscard d’Estaing but it had been referred to by Charles de Gaulle (post-First World War French President) as “Americas first privilege” repeating economist Jacques Rueff.
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Instrument in support of Trade Exchanges (INSTEX) is essentially a barter system that allows companies in the EU and, potentially elsewhere, to completely avoid the US financial system by eliminating cross-border payments.
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An additional problem is the EU’s large and persistent trade surplus with the rest of the world. Being reliant on others to buy export surpluses and invest your excess savings makes the EU more vulnerable in a conflict.
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B. Eichengreen. (2019). “Two Views of the International Monetary System”, Inter-economics 54, no. 4, pp. 233–236.
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A former US Treasury Secretary, John Connally (in President Nixon’s Administration), famously retorted that “the dollar may be our currency, but it’s your problem”.
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V. Dendrinou. (2018). “EU Takes on Dollar’s Global Dominance in New Push for the Euro”.
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The Federal Reserve is the central banking system of the USA.
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The Economist. (2019). “The European Central Bank: Space Exploration”, 20–26 July, p. 61.
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Theodore, J. (2019). The Survival of the Euro?. In: Survival of the European (Dis) Union. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-31214-5_2
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DOI: https://doi.org/10.1007/978-3-030-31214-5_2
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