ABSTRACT
Over the last eight years, the euro area has endured a seemingly unending financial crisis, which has unravelled through various phases punctuated by short-lived recoveries. The crisis has exposed and exacerbated several flaws and gaps in the architecture of Europe’s Economic and Monetary Union (EMU). EMU’s governance could not impede — and in part, it has been argued, endogenously fuelled — the accumulation of substantial private and public debt in several euro area countries.1 Diverse interpretations of the crisis are also in Jones’ contribution in Chapter 7. Nor could it prevent significant losses in competitiveness and overleveraging by banks. Moreover, when the sovereign crisis erupted in 2010, there were no financial backstops for stressed sovereigns or strained banks to counter sudden stops in financial flows.2
