9Towards a political economy of monetary unions

Revisiting the crisis of the Euro area

1 Introduction

The common European currency had a long history before its actual inauguration (the so-called “quest for exchange rate stability in Europe”; see Buiter et al. 1998: 3). It has already completed its first phase, which was “unkindly” stopped by the financial meltdown in 2008. Of course, the latter did not cause the crisis; it just exposed the accumulated contradictions of the first phase. The problems that soon appeared in the banking and public sector have little to do with the “toxicity” of the CDOs. To put it in the most general terms, capitalism internationally went into a phase of the re-pricing of risk, with everything entailed by that process ...

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