19. Lessons of the Crisis for Eurozone Reform

The euro crisis provides a wealth of lessons that should not be ignored. Financial stability was grossly neglected before the crisis. Completing the banking union is a necessary condition to achieve stability. The EMU also needed a big bazooka and a lender of last resort, and they need to be further enhanced and developed. We have to get the policy mix right for the Eurozone in the new equilibrium of low real rates and low inflation. Fiscal rules should be made more counter-cyclical and supportive of structural reforms, and encourage national ownership. In building the Eurozone as a stability union, the main responsibility for economic policies should rest with the member states, while this should be combined with the insurance provided by common structures, especially as regards ensuring financial stability.