“Eurozone resilience and the promise of market integration” by Wolf-Georg Ringe (University of Hamburg – Institute of Law and Economics; University of Oxford – Faculty of Law; European Corporate Governance Institute (ECGI)) was published on 1 July 2024 in the EBI Working Paper Series No. 176.

This article examines the persistent vulnerabilities within the Eurozone architecture exposed during the global financial crisis and subsequent economic disturbances, which remain unaddressed. The paper advocates for enhanced financial integration as a pathway to bolstering the stability of the monetary union through ‘private risk-sharing’, thereby fortifying the system against external shocks. Since the onset of the sovereign debt crisis, policymakers have introduced measures to promote fiscal (public) risk-sharing mechanisms among Member States. However, these initiatives have faced significant political opposition, particularly regarding budgetary constraints, austerity measures, and transfer payments.

As a more effective alternative, this paper posits that stabilization is better achieved through private risk-sharing by fostering deeper integration of financial markets across the Eurozone. The ultimate aim is to establish a private, market-based ‘insurance’ mechanism to safeguard against future external shocks. I develop a series of concrete initiatives designed to implement this strategic approach effectively.

Read the entire article here:  https://ssrn.com/abstract=4881373 or http://dx.doi.org/10.2139/ssrn.4881373