When EMU was designed, more than thirty years ago, it was observed that many things could go wrong with such a project. Several things did. And yet the euro still stands, providing a stable exchange rate for a highly integrated market; too painful to contemplate leaving.
Today, too, there are many analyses of continuing problems with EMU, and proposals for how to resolve them. This European Policy Analysis examines a number of those proposals, separating them into three categories: those which are essential to the long-term survival of the euro; those which would be beneficial but are not (yet) crucial, and those which are not needed, and could even prove harmful.
Wyplosz picks out several proposals which should be prioritised:
The EU institutions must give governments clear and individual targets on what to achieve, and these should be framed in law at the national level.
The European Central Bank (ECB) must be given the mandate to act as a lender of last resort for the euro-countries – it already is, in practice, and acknowledging this would have alleviated the euro crisis.
And the banking union should be completed so that the ECB can act as a lender of last resort to financial institutions.
Implementing these will not prevent all future crises, but it will make the system less fragile and help to deliver a more efficient currency union for Europe.