by Nicolas Veron, Peterson Institute for International Economics
Prepared statement presented before the US Senate Committee on Foreign Relations Subcommittee on European Affairs hearing on "The Future of the Eurozone: Outlook and Lessons"
August 1, 2012
View full document [pdf]
Thank you, Chairman Shaheen, Ranking Member Barrasso, and distinguished members of the Subcommittee for the invitation to appear at today’s hearing.
The euro area has many problems. Based on the lessons from the past five years, I will argue today that the core of the current crisis, what makes it unique, is Europe’s insufficient ability to make authoritative policy and political decisions for the region as a whole. To correct this weakness, Europe must build a fourfold union that would allow such executive decisions to be made. The four components are: (1) a banking union, (2) a fiscal union, (3) a competitiveness union, and (4) a political union, i.e. institutional reform to embed democratic accountability more solidly in decision making.
In the second part of my testimony, I will explore a few topical questions about the first of these four components, namely banking union.
Policy Brief 13-23: How to Form a More Perfect European Banking Union October 2013
Policy Brief 13-17: A Realistic Bridge Towards European Banking Union June 2013
Op-ed: Five Myths about the Euro Crisis September 7, 2012
Article: Why the Euro Will Survive: Completing the Continent's Half-Built House August 22, 2012
Working Paper 12-12: Sovereign Debt Sustainability in Italy and Spain: A Probabilistic Approach August 2012
Policy Brief 12-20: Why a Breakup of the Euro Area Must Be Avoided: Lessons from Previous Breakups August 2012
Policy Brief 12-18: The Coming Resolution of the European Crisis: An Update June 2012
Book: Resolving the European Debt Crisis March 2012
Policy Brief 12-4: The European Crisis Deepens January 2012
Policy Brief 11-21: What Can and Cannot Be Done about Rating Agencies November 2011
Working Paper 11-2: Too Big to Fail: The Transatlantic Debate January 2011
Policy Brief 10-27: How Europe Can Muddle Through Its Crisis December 2010
Policy Brief 10-14: In Defense of Europe's Grand Bargain June 2010
Op-ed: New Imbalances Will Threaten Global Recovery June 10, 2010
Book: The Euro at Ten: The Next Global Currency? July 2009
Op-ed: Europe Must Look East to Deal with the Euro October 11, 2007
Op-ed: Start by Saving the Eurozone October 24, 2008
Speech: The Euro and the World Economy April 27, 2005
Book: The Euro at Five: Ready for a Global Role? April 2005