ABSTRACT
This chapter discusses the euro crisis as a structural crisis of the EMU. It argues that monetary and economic integration has created a misfit between a high degree of economic integration and a fragmented regulation of the eurozone. Under conditions of a common currency and a liberalized internal market, northern countries like Germany based their economies on exporting industries and low labor costs. The southern periphery, where many of the ‘crisis countries’ were located, relied on the inflow of external liquidity – in other words, debt – to finance consumption and investments. The euro crisis has revealed this dichotomy of economic models to be unsustainable. The chapter concludes that the EMU had created a ‘regulation vacuum’: European institutions were unfit to balance out the uneven development of its member states or to intervene when the spillover effects of the global financial crisis became visible.
