2013 年 2013 巻 33 号 p. 190-212
The Euro Crisis that started in 2009 has led many to argue that fiscal unification is necessary for monetary unification to work. This paper argues that fiscal unification is not sufficient to secure stable prosperity. The problem is wider than the fiscal aspects of the economy. The euro crisis resulted from asymmetries, in particular asymmetries with respect to structural reform, which remained within the Euro Area. “Asymmetry” is a term used by economists to describe a characteristic that exists in one country but not in the other. Fixed exchange rates and single currencies do not coexist well with asymmetries. This is because exchange rates change when market participants buy one foreign currency and sell another, and such transactions happen because of asymmetries.
With or without the Euro, the European economies are not going to enjoy sustainable prosperity without convergence towards fiscal consolidation and high productivity. For such a convergence to take place, member states must undertake painful structural reforms. The euro was supposed to induce such reforms, by taking away the easy options of monetary and fiscal expansion. The European Central Bank is the one central bank for the entire euro area, and the aim of its policy is price stability. The deficit and debt reference values of the Maastricht Treaty were carried over as the Stability and Growth Pact. As it turns out, however, these monetary and fiscal constraints were not enough to ensure convergence towards fiscal and economic health in the Euro Area.
To encourage member states to take the necessary measures towards convergence, the European Union (the Euro Area in particular) has now embarked on a major governance overhaul. It is possible to describe this as a large step towards interference in domestic policy-making. The European Banking Union is one aspect of this governance reform. The EU is the first region of the world that is simultaneously tackling all of the following basic contradictions: 1. fiscal consolidation and economic upturn, 2. financial regulation and active financial intermediation, 3. sovereignty and integration. As the EU moves forward, how well will the EU strike a balance between the two extremes for each of these basic contradictions? The rest of the world has a lot to learn from this process.
In this paper, we first confirm that asymmetries remained within the Euro Area, and that lack of fiscal unification was not the only problem. In doing so, we briefly turn our eyes to the United States to emphasise that fiscal unification alone cannot ensure stability. Next, we review the extensive governance overhaul taking place in Europe, and stress the importance of ensuring that the different fiscal rules are mutually consistent. In closing we discuss the tasks ahead.