It is still possible – economically and politically – to find away out of the eurozone crisis if policy makers separately address two problems: dealing with the legacy costs of the initially flawed design of the euro zone, and fixing the design itself.
The former requires significant burden sharing and an economic strategy that focuses on stabilising the countries that are suffering from recession and capital flight. In contrast, fixing the design requires a financial (banking) union with strong euro area institutions and a minimal fiscal backstop.
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