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Reforming a suboptimal currency area

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Author(s): Ion-Lucian Catrina

Journal: Sfera Politicii
ISSN 1221-6720

Volume: XX;
Issue: 167 (1);
Start page: 103;
Date: 2012;
Original page

Keywords: monetary union | fiscal reform | public debt | growth | competitiveness

ABSTRACT
For more than two years, the most used expression in relation with the European Union refers to the imminent monetary „disintegration”. Such a scenario is not realistic at all, because it does not take into account the economic interdependencies existing between the member countries of the monetary zone. This paper aims at showing that despite the fact that the European Monetary Union has started as a sub-optimal monetary area, it will not disintegrate, but rather force the reform towards fiscal unification. We also highlight the fact that the latest mechanisms chosen to ensure budgetary stability are only temporary solutions compared with the complex European Union’s issues: high debts, fiscal policy, competitiveness, growth and others.
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