Since 1999, an over time increasing number of countries in Europe have shared a common currency and now belong to the so-called Eurozone.
Today, 19 countries have relinquished their national monetary policies, four of them joining after 2009. During its first decade, the Eurozone’s performance was assessed as largely successful. In the wake of the financial crisis (with its nadir in the fall of 2008) and the ensuing sovereign debt issues in Europe’s periphery, however, a whole roster of issues concerning the institutional set-up of the Eurozone have come to the fore. Moreover, member states responded rather differently to address the various crisis-related challenges. Germany in particular proved to be less vulnerable than others, and it recovered comparatively quickly from the recession.
Against this backdrop, it might appear to be obvious to treat Germany as a role model. The Hartz IV (labor market and social security) reforms, implemented in the mid-2000s, seem to have buttressed the German economy’s capacity to weather the crisis. In addition, the insistence on limiting cyclically adjusted public sector deficits (“debt brakes”) to a very low-level was seen as a further defining characteristic of a healthy economy. However, this assessment is not generally shared. Especially the high current account surpluses have drawn a continuous stream of critique.
In this panel we would like to address these issues. They are crucial to understand how to increase the Eurozone’s capacity to absorb future shocks. And they are equally crucial to answer the question: How can we make Europe prosperous and attractive for all Europeans again?