Everything at the beginning: "A new euro must come"
Under his leadership, the European Central Bank intervened to save the euro.
The euro has failed, is the diagnosis of three authors. Luckily, they also provide the appropriate therapy. Mario Draghi takes his time. Much time. That's the problem. At least from the perspective of Nicolaus Heinen, Jan Mallien and Florian Toncar.
Again and again, the authors criticise the head of the European Central Bank (ECB) for postponing the withdrawal from loose monetary policy and thus buying the euro countries time to cope with their economic crises. This masks the problems of the Eurozone but does not solve them, they write in their book "Everything at the Beginning".
Their bitter realization: "In its current form, the euro has failed." The trio of authors are examining the policy of the ECB from different perspectives: Heinen as an economist, Mallien as a financial journalist and Toncar as a lawyer. It unites the idea: "A new euro must come." Fortunately, they keep the description of the situation short.
They would rather provide a detailed concept for a "post-crisis currency union". That the Eurozone is sick is known by a wide public. After the introduction of the euro, interest rates on debt have dropped in the past decade. As a result, a number of euro-area countries were over-indebted and faced bankruptcy between 2010 and 2012. The ECB jumped in to save them and the currency. The bank did what she should never do from a German perspective.
It bought government bonds, in other words, it started up the money printing presses. It was able to stabilize the euro zone for the time being. However, the constructional defects remained. "The diminishing confidence in the European institutions shows that more and more citizens, investors and businesses recognize the fundamental weaknesses of the currency," the book says.
For the necessary re-start, the authors have three steps in mind: Firstly, each state should again be liable for its debts. However, in order to prevent renewed indebtedness, the authors do not simply want to return to the "Maastricht Union" of the initial period. There is also no solution with greater European centralism.
They propose reforms in financial policy, which are aimed at the national level: stress tests, similar to the banks also for states, supervision of the national budgets by the ESM, voluntary national savings arrangements and punishment of states with too high debt by compulsory issue of subordinated debt securities. If a euro country remains in financial distress despite these precautions, the duration of its debts should automatically be extended by three years.
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