The euro zone has underperformed for two decades. The shift from a #euroboom to #eurogloom was wearily predictable
The euro area is back on the brink of recession
Bad company
A split euro is the solution for Europe’s single currency
Joseph Stiglitz
August 17, 2016 4:32 am
The problems with the structure of the eurozone may be insurmountable, writes Joseph Stiglitz
Comment illustration by James Ferguson
That Europe, and especially the eurozone, has not been doing well since the 2008 crisis is beyond dispute. The single currency was supposed to bring prosperity and enhance European solidarity. It has done just the opposite, with depressions in some countries greater than the Great Depression.
To answer the question about what is to be done, one has to answer another: what went wrong. Some claim that policymakers made a set of mistakes — excessive austerity and poorly designed structural reforms. In other words, there is nothing wrong with the euro that could not be fixed by putting someone else in charge.
The single currency was supposed to be a means to an end. It has become an end in itself — one that undermines more fundamental aspects of the European project, as it spreads divisiveness rather than solidarity. An amicable divorce — a relatively smooth end to the euro, perhaps instituting the proposed system of the flexible euro — could restore Europe to prosperity and enable the continent to once again focus, with renewed solidarity, on the many real challenges that it faces. Europe may have to abandon the euro to save Europe and the European project.
The writer, a Nobel laureate in economics, is author of ‘The Euro: How a Common Currency Threatens the Future of Europe’
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