scholarly journals Towards a more resilient euro area

2019 ◽  
Vol 8 (2) ◽  
pp. 106
Author(s):  
Esther Gordo ◽  
Ivan Kataryniuk
Keyword(s):  
Euro Area ◽  
Capital Markets ◽  
Risk Sharing ◽  
Common Currency ◽  
Monetary Unions ◽  
Economic Resilience ◽  
Currency Area ◽  
The Us ◽  
The Common ◽  
Lower Capacity

The euro area has shown lower capacity to resist shocks than other monetary unions, such as the US. One possible determinant is the lack of risk-sharing mechanisms. In this article, we estimate the risk-sharing capacity of the Euro Area according to the Asdrubali et al. (1996) methodology. The results show that the degree of risk-sharing is low in the euro area, in particular, due to underdeveloped capital markets and the lack of a central fiscal capacity. We suggest venues of reform to increase the economic resilience of the common currency area.

scholarly journals The Resilience of the Euro

2021 ◽  
Vol 35 (2) ◽  
pp. 3-22
Author(s):  
Philip R. Lane
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Public Debt ◽  
Risk Premia ◽  
Policy Support ◽  
Economic Recovery ◽  
Common Currency ◽  
Institutional Reforms ◽  
Fiscal Capacity ◽  
The Common

Over 2014 – 2019, the euro area charted a substantial post-crisis economic recovery while also reducing macro-financial vulnerabilities. The array of post-crisis institutional reforms has improved the capacity of the euro area to withstand adverse shocks, even if the narrowing of imbalances also came at a high cost (especially in the most indebted member countries). The pandemic has provided a new test: the combination of a common central bank and the enlargement of the common fiscal capacity has provided substantial policy support and fostered a narrowing in risk premia, despite significant differences in levels of public debt and exposures to the pandemic shock. While the resilience of the euro is sure to be tested further in the coming years, the extent of the underlying political backing for the common currency should not be underestimated.

ECB sovereign QE could support inflation trends

2015 ◽  
Keyword(s):  
Euro Area ◽  
Risk Sharing ◽  
Large Scale ◽  
The United States ◽  
Wealth Effects ◽  
Medium Term ◽  
Content Type ◽  
European Institutions ◽  
The Us ◽  
Asset Backed Securities

Significance The programme expands existing purchases of asset-backed securities and covered bonds with large-scale buying of bonds issued by euro-area governments, agencies and European institutions. Purchases will amount to a combined total of 60 billion euros (69 billion dollars) per month, starting in March. They will continue until at least September 2016 -- or until there is progress towards the central bank's medium-term inflation goal. Impacts The larger than expected size of the programme will be achievable thanks to partial risk sharing among national central banks. Wealth effects will be smaller than in the United States and United Kingdom, as euro-area capital markets are less deep. The QE programme will amount to 12% of euro-area GDP, while the US programme was larger, at 25% of GDP.

scholarly journals COMPARATIVE ANALYSIS OF STRUCTURAL Σ-CONVERGENCE OF EXPORTS

2020 ◽  
Author(s):  
Vera Pirimova ◽  
Keyword(s):  
Comparative Analysis ◽  
Euro Area ◽  
Graphical Form ◽  
Economic Convergence ◽  
Common Currency ◽  
Dissimilarity Index ◽  
Index Method ◽  
Analysis And Synthesis ◽  
The Common ◽  
Degree Of Similarity

The paper analyses the structural σ-convergence of exports of six CEE countries to the Euro area. The countries are Estonia, Latvia, Lithuania, Slovakia, and Slovenia, which are members of the Euro area, as well as Bulgaria, which was included in the ERM II currency mechanism on 10.07.2020. The main goals are to measure and compare the structural σ-convergence of exports of the six CEE countries and to prove whether the introduction of the common currency (the euro) has an impact on the convergence. The research consists of the theoretical and empirical parts. The theoretical part systematizes basic concepts of economic, trade, club, and structural convergence. One index method used by his authors to study economic convergence has been adapted to the structural σ-convergence of exports. This is the dissimilarity index of Von Hagen and Traistaru. In the empirical part, the values of the index, by commodity groups, according to SITС, Rev. 4, for the six countries during the period 2002-2018 are determined. The index is calculated also as aggregated, referring to the total exports of the selected countries and for the whole period. The results are presented in graphical form. Based on them, the structural and dynamic characteristics of the convergence and divergence of exports of the six countries compared to the exports of the Euro area are derived. Conclusions are made about achieved the different degree of similarity, that is uncertain and unstable and so the convergence can be only partially attributed to the adoption of the euro. Methods of analysis and synthesis, induction and deduction, methods of the empirical index, and comparative analysis are applied.

scholarly journals Euro: the engine of integration or the seed of dissolution?

2008 ◽  
Vol 54 (No. 4) ◽  
pp. 137-149
Author(s):  
A. Rusek
Keyword(s):  
Economic Integration ◽  
Common Currency ◽  
Currency Area ◽  
The Common ◽  
The Eu

The common currency Euro is considered one of the biggest achievements of the European political and economic integration. However, it is necessary to stress that Euro was always first and foremost a political feat. Economists by and large pointed out that the EU – even in its 1992 reincarnation – is not an optimum common currency area (OCA). But politicians and some economists hoped that the existence of Euro itself may accelerate the processes toward the OCA. However, this did not happen and the divergence processes inside the Eurozone accelerated after 1999. Today, the Eurozone stands near the crossroad – where some countries may be increasingly tempted to leave.

The current economic and debt crisis in eurozone and crisis of grand theories of European integration

Human Affairs ◽  
2013 ◽  
Vol 23 (3) ◽  
Author(s):  
Dušan Leška
Keyword(s):  
European Integration ◽  
Euro Area ◽  
Social Constructivism ◽  
Debt Crisis ◽  
Economic Recession ◽  
Banking Union ◽  
Common Currency ◽  
Eu Member States ◽  
Liberal Intergovernmentalism ◽  
The Common

AbstractThe economic and debt crisis threaten many eurozone countries and the very existence of the common currency, the euro. The crisis has meant that some special mechanisms have had to be created (EFSF, ESM) and the introduction of special procedures in heavily indebted countries. The deepening of the crisis and the economic recession in the euro area have resulted in the growth of nationalism and anti-European sentiments in EU member states. Resolving the crisis, however, requires further convergence of the eurozone countries, the formation of a fiscal union and a banking union. At the same time, the crisis has shown that the grand theories of European integration, neo-functionalism and liberal intergovernmentalism, have failed to provide answers to the questions raised by the crisis, and this has led to the growing importance of social constructivism.

scholarly journals Aspects of divergence in the Euro Area

2020 ◽  
pp. 9
Author(s):  
Nicos Christodoulakis
Keyword(s):  
Euro Area ◽  
Capita Income ◽  
Capital Formation ◽  
Common Currency ◽  
Policy Initiatives ◽  
Convergence Process ◽  
Quality Of Institutions ◽  
The Common ◽  
Per Capita

The paper examines how the convergence process between the less and the more developed members of the Euro Area weakened significantly after the circulation of the common currency, and subsequently reversed course in the postcrisis recession. The front-loaded consolidation programs that followed the bailouts in the over-indebted economies caused asymmetric losses in per capita income in the peripheral countries and led to further North-South polarization. The paper identifies public indebtedness, quality of institutions and capital formation as the areas where divergences are more pronounced and suggests that policy initiatives to encourage more investment and a faster institutional assimilation are needed for the convergence process in the Euro Area to take off again.

scholarly journals Foreign trade and the theory of optimum currency areas. Implications for Poland

2016 ◽  
pp. 5-26
Author(s):  
Iwona Maciejczyk-Bujnowicz
Keyword(s):  
Exchange Rate ◽  
Euro Area ◽  
Statistical Data ◽  
Common Currency ◽  
Eu Member States ◽  
Currency Area ◽  
The Subject ◽  
Optimum Currency ◽  
High Degree ◽  
High Share

The paper focuses on one of the aspects of the OCA theory and on a new endogenous approach analysing mutual trade links of the countries in a common currency area. According to Kinnon (1963), a high degree of openness of the candidate countries is a precondition for establishing an OCA. Thus, the area can be created by countries with a high share of exports and imports in their GDP. The more open an economy, the higher the importance of the exchange rate for prices. We reviewed the literature on selected studies on the subject and analysed statistical data describing Poland’s trade in the years 2000–2010 with the euro area and EU member states outside of it.

scholarly journals OCA INDEX AS INDICATOR OF THE CZECH REPUBLIC'S PREPAREDNESS TO JOIN THE EUROPEAN MONETARY UNION

2021 ◽  
Vol 11 (2) ◽  
pp. 91-94
Author(s):  
SARKA HYBLEROVA
Keyword(s):  
Czech Republic ◽  
Monetary Union ◽  
Euro Area ◽  
European Monetary Union ◽  
Common Currency ◽  
European Monetary ◽  
The Czech Republic ◽  
Currency Area ◽  
Using Data ◽  
Key Indicators

The optimum currency area (OCA) theory evaluates the currency area as optimum at a time when the participating countries are not at risk of macroeconomic instability due to the existence of a common currency. The OCA index is a tool used to comprehensively assess the costs and benefits of a candidate for joining a monetary union. It is constructed as a bilateral index assessing the appropriateness of introducing the single currency in two countries. The article presents the OCA index quantified for the Czech Republic in relation to Germany, which is considered to be the core of the European Monetary Union. Since the OCA index needs to be interpreted in a temporal or spatial comparison, the calculation of the OCA index was also performed for other countries of the Visegrad Group (V4) and furthermore for Austria and Portugal, using data from the period of 2007–2019. The results of the OCA index show a high degree of variability in the Czech Republic in the observed period. While in the first half of the period under review, the Czech Republic achieved the best results within the assessed economies and the Czech Republic's level of preparedness for the common currency with Germany was higher than in the case of Austria, it fell sharply after 2012. The reason can be seen, among other things, in the higher growth rate of the Czech economy than in the euro area. Although the OCA index is an indicator assessing the preparedness of an economy to join a monetary union, it cannot be the only indicator. Other important criteria include, for example, labour mobility, price and wage flexibility, fiscal integration and more. Although the Czech Republic is approaching the euro area average in all key indicators, the gap from it remains significant for most indicators and thus continues to be a factor against the adoption of the euro in the coming years.

Financialization of government debt? European government debt management approaches 1980–2007

2016 ◽  
Vol 21 (1) ◽  
pp. 27-44 ◽  
Author(s):  
Jenny Preunkert
Keyword(s):  
Government Debt ◽  
Debt Management ◽  
Common Currency ◽  
Public Authorities ◽  
Currency Area ◽  
The Common ◽  
Management Approaches ◽  
Private Investors ◽  
The Relationship

The aim of this article is to explore the strategies European government debt managers used in response to the growing demand for credit by governments since the 1980s and how the introduction of the common currency area influenced the nature of government debt management. The analysis indicated that in the 1980s, a paradigm shift emerged as bilateral debt relationships became negligible, while the role of financial market principles became much stronger. A financialization of the relationship with private investors took place, although still highly regulated. The introduction of the euro resulted not only in the new European rules but also in the financialization of the regulatory framework. The participating governments lost the privilege to encapsulate their markets. Because of these two processes, managing government debt in the common currency area meant developing a strategy to successfully issue in a transnational market without support from public authorities at least until the crisis.

scholarly journals A Search for an Optimum Currency Area

2018 ◽  
Vol 11 (39) ◽  
pp. 75-90
Author(s):  
Martin Hudec
Keyword(s):  
Theoretical Concept ◽  
Monetary Integration ◽  
Optimum Currency Area ◽  
The European Union ◽  
Common Currency ◽  
Euro Adoption ◽  
Currency Area ◽  
Optimal Currency Areas ◽  
The Common ◽  
Optimum Currency

Abstract Economic and monetary integration is the result of unifying efforts that have become a major driving force in post-war Europe. Although some of the initial initiatives, the Monetary Union project has many times been on the brink of interest. It can be as the surprise that Europe has managed to implement the common currency so soon and relatively smoothly. Nevertheless, even after its launch, this project has never completely abandoned criticism and discussion of the legitimacy and meaningfulness of its existence. Critical attitudes to the introduction of the common currency in the European Union are based above all on the Optimum Currency Area theories. The theoretical concept of optimal currency areas is currently considered a standard tool for assessing monetary integration efforts in Europe. OCA criteria are used to estimate the readiness of the candidate countries to adopt the euro, while the convergence processes are linked to the decision on the euro adoption timeline. The aim of our research article is, therefore, to closely analyze the issue of monetary policies and optimal currency areas in the context of convergence efforts towards more closely integrated economic and monetary unions.

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