ABSTRACT
Seen from the perspective of the interconnected excessive imbalances, banking, and sovereign debt crises that beset the Euro Area from 2007, the central inadequacy of the Maastricht Treaty was the failure to address the problem of the inherent imperfections of any provisions for crisis prevention and management in Economic and Monetary Union. The inadequacy stemmed from a cluster of naïve assumptions: about state capacity to comply with Treaty-based rules to prevent crises; about the tractability of economic and political cultures; about the adequacy of moral hazard as a design principle for monetary union; and about putting in place monetary union without economic, fiscal, banking, and political union. Consequently, managing crises of sovereign and bank creditworthiness had not been a problem on the Maastricht agenda. Subsequent failures to be prepared to manage compound crises were compounded by the complacency induced by the ‘political economy of good times’ into which the Euro Area was launched. EMU posed questions about the dominant teleological assumption underpinning the Maastricht Treaty. It risked exposing not just the limits of Europeanization but also serving as a catalyst for ‘de-Europeanization’.
