The EU’s Policy Response: Too Little Too Late
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The chapter first illustrates the initial policy response following the sovereign debt crisis: despite the creation of the ‘save-State’ funds (European Financial Stability Facility, EFSF, and European Stability Mechanism, ESM), executed through the ‘troika’, the EU’s reaction was delayed and inadequate. The lack of effective crisis-management mechanisms (e.g. ‘Eurobonds’) is also emphasised. In regard to monetary policy, a complete account is provided of the ‘unconventional measures’ introduced by the ECB, including the Outright Monetary Transactions (OMT) plan, which has been crucial for ‘saving the euro’, and the quantitative easing (QE) adopted chiefly to fight deflation and reinforce economic recovery. The effectiveness of such measures has been limited also because the banking union is not yet complete. Finally, the EU’s structural policies (Lisbon agenda and ‘Europe 2020’ plans) are evaluated.
KeywordsSave-States funds Troika Eurobonds Unconventional monetary policies Quantitative easing Banking union Structural policies
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