The institutional changes recommended by euro-area elites will likely exacerbate global imbalances.

One of the interesting ideas we discussed was the “re-nationalisation of fiscal policy”. 

In exchange for accepting German plans for a European Monetary Fund, which would only provide emergency lending after private creditors are forced to take large losses, elected governments would have more freedom to tax and spend. 

Treaty-based deficit rules would be replaced by market discipline.

 Matthew C Klein, FT Alphaville 8 November 2017

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