The Euro and the Crisis

Volume 43 of the series Financial and Monetary Policy Studies pp 33-46


A Structural-Reform Proposal for a Two-Speed European Monetary Union

  • Sergio RossiAffiliated withDepartment of Economics, University of Fribourg Email author 

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This chapter presents a structural–monetary reform to transform the euro into a factor of European integration rather than representing a straightjacket for member countries that are suffering from the crisis without any likelihood to resolve it. This requires transforming the European Central Bank to make it become a settlement institution for those national central banks that participate in the TARGET2 system, enabling those member countries that are suffering most from the crisis to reintroduce their own national currencies for their domestic payments. This will transform the euro into a truly international currency, thereby providing for both an orderly working euro-area payments system and the possibility to steer domestic interest rates policy with the aim of contributing to economic as well as financial stability. Such a structural–monetary reform will be instrumental in enhancing at both economic and institutional level the integration of euro-area countries, with a view to do justice to the original project of European union.