Whither European Economic Governance?

Bodo Herzog


This paper develops a new governance scheme for a stable and lasting European Monetary Union (EMU). Idemonstrate that existing economic governance is based on flawed incentives especially due to insufficientmacroeconomic coordination, failures of institutional enforcement and animal spirit in financial markets. All thiscaused the European sovereign debt crisis in 2010. Consequently, the EMU crisis is not a conundrum at allrather a failure of national and supranational governance. To tackle this problem, I propose a return to flexiblebut compulsory rules driven by market forces. The new governance principles shall promote the compliance andeffective enforcement of rules.

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DOI: http://dx.doi.org/10.5539/ijbm.v9n2p60

International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

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