The Political Economy of Monetary Solidarity: Understanding the Euro Experiment

Monetary solidarity is not what observers would spontaneously associate with the euro experiment. Deliberate or at least consciously tolerated risk-sharing between members of a currency union – which is how monetary solidarity is defined here – may not be a prominent feature of the euro area, but it does exist. The potential for this type of mutually beneficial cooperation is not adequately exploited, however. The talk explores some of the less obvious risk-sharing mechanisms in the euro area, such as a cross-border payments mechanism, and explains why the potential for risk sharing is not more fully exploited, based on the by-product theory of collective action. Waltraud Schelkle is an economist with a background in development economics and macroeconomics. An Associate Professor of Political Economy at the European Institute of the London School of Economics and Political Science since 2001, she got her training at the Free University of Berlin (FU; habilitation in economics in 1998) and Duke University. Her research interests include the finance-welfare state nexus, the political economy of European integration, and monetary integration. Waltraud Schelkle is also a (non-resident) Senior Fellow at the American Institute for Contemporary German Studies (AICGS) at Johns Hopkins University, and Chair of the Advisory Board of the Centre for Social Policy Research (Zentrum für Sozialpolitik) in Bremen