WEEKEND ECONOMIST: Full-scale fiscal union

For Europe's currency union to survive, the region must achieve fiscal union as well, but the process will be slow and require significant sacrifices by Germany and the 'peripherals'.

It is our view that in the long run a European currency union cannot survive without a complementary fiscal union.

The euro flourished over the pre-GFC decade due to an excessive build-up in debt in the European region. Cheap credit fuelled real estate bubbles; consumer spending booms; fiscal profligacy; and lack of necessary structural reform.


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