Divergence of liability and control as the source of over-indebtedness and moral hazard in the European monetary union
The Eurozone is weak. This column presents an analysis of its two prime weaknesses – the lack of economic and fiscal policy discipline leading to the build-up of huge public and private debt levels and a loss of competitiveness, and the lack of credible mechanisms for crisis response that would reign in moral hazard problems and establish market discipline. Completing the currency union’s architecture and achieving credibility for its rules are key, given the heterogeneity and rigidity of its member countries' economies.
Feld, L., C. Schmidt, I. Schnabel und V. Wieland (2015), Divergence of liability and control as the source of over-indebtedness and moral hazard in the European monetary union. VOX CEPR Policy Portal, 07.09.2015.