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A giant leap for the eurozone – a small step for Greece…

Monastiriotis, Vassilis (2011) A giant leap for the eurozone – a small step for Greece…. LSE Greece@LSE (01 Aug 2011). Blog Entry.

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The agreement reached in the 21/7 Eurogroup Summit is beyond doubt historic. For a first time the eurozone leaders moved towards a comprehensive response to the crisis, which addresses it not as a country-specific liquidity problem, or a problem of public finance management, but rather as a much wider solvency problem affecting fiscal stability in the Eurozone at large. The agreement is moreover historic because it provides an example (and a template?) for how institutional constraints, like those on national bailouts and central bank independence set by the Maastricht Treaty, can be overcome if enough political resolve and ingenuity is on the table. It creates essentially a permanent bailout mechanism which can operate, in political terms, independently of the ECB. What this means about the so-called primacy of monetary policy and for price stability in the eurozone remains to be seen. But the historic moment of the agreement is that it reflects an “it is politics, stupid” attitude: it is the moment when Europe becomes again the field where economic problems are offered political solutions – and not a technocratic arena where markets dictate politics.

Item Type: Online resource (Blog Entry)
Official URL:
Additional Information: © 2011 The Author(s); Online
Divisions: European Institute
Spatial Economics Research Centre
Hellenic Observatory
LSEE - Research on South Eastern Europe
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
J Political Science > JC Political theory
J Political Science > JN Political institutions (Europe)
Sets: Departments > European Institute
Research centres and groups > Spatial Economics Research Centre
Research centres and groups > Hellenic Observatory
Research centres and groups > LSEE Research on South Eastern Europe
Collections > Greece@LSE Blog
Date Deposited: 01 Jun 2017 09:18
Last Modified: 20 Feb 2019 13:38

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