The euro area in crisis

The 9th EUROFRAME Conference on economic policy issues in the European Union was held in Kiel on 8 June 2012. The Conference topic was: “The euro area in crisis: challenges for monetary and fiscal policies and prospects for monetary union”. Twelve of the papers given at the Conference are released in this issue of the Revue de l’OFCE/Debates and Policies. In 2012, the euro is a failure from many aspects: the euro area is unable to recover the nine percentage points of GDP lost because of the financial crisis; GDP will fall slightly in 2012 and is expected to be stagnant in 2013. In recession times, Member States (MS) are constrained to run austerity policies. Three countries have had to request support from the IMF and Europe, and must implement drastic adjustment plans under the supervision of the Troika (the Commission, the ECB and the IMF). Euro area MS public debts are no longer considered as safe assets; euro-denominated debts have become heterogeneous with financial markets requesting high risk premia on Southern MS government debts. MS economic policies are under permanent financial markets pressure. (First paragraphs of the introduction