Strengthening the Institutional Underpinnings of the Euro

Policy Letter No. 14, 2010

Stefan Gerlach
Research Area:
Macro Finance
Oct 2010
Stability and Growth Pact, fiscal policy, public debt

This European Policy Analysis discusses the need to strengthen the institutions underpinning the euro and makes several policy recommendations. The Stability and Growth Pact must be reinforced, have greater automaticity and entail graduated sanctions. Fiscal surveillance must be improved through the establishment of a European Fiscal Stability Agency. Finally, the European Financial Stability Facility must be made permanent.

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