La Banque Centrale Européenne a publié le discours de Benoît Coeuré, membre de son Conseil exécutif, à la conférence inaugurale : «Crise européenne: des parallèles historiques et les leçons économiques".
Le discours a pour thème principal l'analyse du partage/répartition du risque dans la zone Euro pendant la crise.
In my remarks today, I wish to reinterpret the crisis in the euro area by speaking about mechanisms to share economic risks within Economic and Monetary Union (EMU).
I will first describe risk-sharing in EMU before the global financial crisis of 2007-08. The architects of the euro expected Monetary Union to foster flexibility of national economies and convergence between them, and emphasised the need for economic policy to accompany and accelerate this process. Furthermore, they stressed that national public debt levels needed to be moderate on average, so that fiscal policy could be used to smooth out the effects of adverse economic shocks. They also believed that most of the pre-EMU shocks to national economies were the result of monetary and exchange rate policy decisions, and they expected them to be less pronounced once Monetary Union was in place.
I will argue that the outcome was very different from that foreseen by the architects of the euro. In the first years of EMU, market-based risk-sharing mechanisms developed surprisingly quickly – perhaps too quickly – while policy did too little to induce flexibility or convergence and national fiscal institutions malfunctioned.
I will then speak about the effects on risk-sharing of the global financial crisis of 2007-08 and the ensuing European sovereign debt crisis that began in 2010.
The two crises impaired the market-based risk-sharing mechanisms in EMU. Since flexibility or convergence had not been achieved to the necessary extent, and national fiscal policy had limited ability to provide self-insurance, the two crises left the euro area with insufficient risk-sharing arrangements. The actions of the European Central Bank (ECB) and other public institutions, acting within their respective domains and according to their mandates, had the effect of temporarily filling this void.
In the last part of my remarks, I will argue that, for EMU to be put on a sound and durable footing, market-based risk-sharing mechanisms must be restored and strengthened. Furthermore, the need for policy-makers to foster flexibility and convergence and for national fiscal policy to act responsibly must be taken seriously. The development of new pan-European institutions is also desirable, but as a complement to – not as a substitute for – policy action at the national level.
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