Webex-seminar: Fragility of the euro(area) after the pandemic: a Dutch perspective

The expectation underlying the introduction of the euro was that the independent ECB with price stability as its primary objective would be able to deliver price stability and thereby contribute to sustainable economic growth. The “no bailout” clause, prohibition of monetary financing of government deficits in the primary market and the avoidance of excessive deficits played a central role in the construct. They would help to ensure that monetary policy aimed at price stability would not be hampered by irresponsible fiscal policies. However, the financial crisis has driven the euro and the ECB off track. It has shown that the euro (area) is fragile. That may not be unexpected given the financial crisis and the fact that the euro is still a young currency of a number of countries which do not constitute a political union. The outbreak of Covid-19 has further increased the fragility of the euro (area). In this presentation, the fragility of the euro (area) will first be documented. Next the current and foreseen approach at EU/euro area level to diminish this fragility will be addressed and assessed, to continue with the Dutch role in this approach and two alternatives to this approach from a Dutch perspective.