Debt in the Eurozone: Time to Act
Hélène Rey, O.B.E., Lord Raj Bagri Professor Of Economics, London Business School
The sovereign debt crisis in the Eurozone, the paralysis of the European Union in front of growing populist movements (with some advocating an exit from the common currency) and the emergence of strong popular discontent with the ECB in some parts of the Eurozone are all symptoms that Europe failed to design institutions robust enough to weather difficult times. The stakes are now high: when economic shocks and political crises coincide, the risk of disintegration rises to alarming levels. We are living through the consequences of a Brexit vote, an unexpected US election outcome and more political surprises may yet appear. Coordinated actions are needed to improve the resiliency of the euro-zone, but these are difficult to implement because of the political climate and the electoral calendar.