The key to stabilizing the Eurozone is to sever the “doom loop” that links weak banks and governments and leads them to drag one another down. Only a completed banking union can do that. A true banking union must combine common supervision of banks, a common mechanism for the resolution of failed banks and common deposit insurance.
Thought mk and wasoxygen would find this interesting.
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mk: The key to stabilizing the Eurozone is to sever the “doom loop” that links weak banks and governments and leads them to drag one another down. Only a completed banking union can do that. A true banking union must combine common supervision of banks, a common mechanism for the resolution of failed banks and common deposit insurance.
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German Chancellor Angela Merkel and other leaders of stable Eurozone countries have long opposed a stronger banking union that would include features such as common deposit insurance; they fear will put their taxpayers on the hook to bail out failed banks on the Eurozone’s periphery. But the latest chapter in the Greek crisis should serve as a reminder that the costs of the absence of a banking union are likely far higher than the costs of constructing one.
According to the bio, Kelemen is a Professor of Political Science and Jean Monnet Chair in European Union Politics at Rutgers University. Therefore, I assume that he is well-versed in European politics and history. However, I can't see how a banking union can be achieved without a fiscal union, as they are pretty much one and the same as described here, and I cannot imagine that Europe is ready for that. Fiscal union basically means a United States of Europe.