PART II

The Imperfect Architecture of the Eurozone

Introduction

Much like a house with a shaky foundation becomes unstable over time, much of the Euro crisis can be blamed on the faulty architecture of the European monetary union, or “Eurozone”—the group of countries that collectively share the euro as their common currency. While early in the crisis European leaders often blamed their misfortune on the world financial crisis of 2008 that began in the United States, much of the cause of the crisis can be traced to how the euro and EU were designed. In particular, one can identify three sources of problems that contributed to the crisis occurring and that now makes it much worse: a governmental architecture that undermines effective crisis response, ...

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