1 January 2012


Paola Subacchi

Dr Paola Subacchi

Senior Research Fellow, Global Economy and Finance
Stephen Pickford

Stephen Pickford

Associate Fellow, Global Economy and Finance


  • Europe's sovereign debt crisis has exposed the deficiencies in the governance of the European Monetary Union (EMU) and shown the limits of its framework of policy cooperation. Most of all, the crisis has threatened the political fundamentals of the currency union and greater integration in Europe. 
  • Factors underlying the current crisis predate the 2007-08 global financial crisis and are a mix of structural problems in some member states and faults in the design of the EMU framework. 
  • Short-term tasks for countries in the euro area include: to normalise the access of banks to market funding; to convince markets that their public debt is on a sustainable track; and to improve their external payments position. 
  • Longer term challenges include: improve competitiveness, restore growth, and rebalance the intra-EMU growth pattern.
  • The paper concludes by assessing the chances of the euro to survive in its present form if the necessary structural measures are not implemented.
This is a Nomura Foundation publication.