Stolzi's Blog

In front of differences of heads of States’ opinion on main solutions to resolve crisis, Euro zone became a threat more than an advantage, a failure in conclusion? Crisis appeared as a virus: states, which are not protected, suffered from it and echoes threats without knowing to others.

In the first phase of the financial crisis, after the bankruptcy of Lehman Brothers in the United States, the euro seemed at first symbolizing a good shield. However, following Greece’s wreck, the very chaotic management of crisis by Euro zone’s leaders hardly compromised Monetary Union’s confidence.

Inside the European Union, the question settles differently. European leaders, in spite of their differences, really consider the end of euro would establish much worse disaster than its preservation.

Nevertheless, in order to insure single currency’s survival, they truly try to surmount incoherence, which presided over the launch of such currency. That is why Angela Merkel insisted both on budgetary discipline in exchange for an effort of solidarity she agreed under pressure.

The current crisis signs Monetary Union’s failure in its first version. All the stake of debt crisis battle consists in trying to create another constitution to avoid a future breakage due to single currency’s disappearance.

The next summit gathering Nicolas Sarkozy, Angela Merkel and Mario Monti has to take place on December 9^th 2011. This European Council will be an intense moment of negotiation on Europe objectives. They must be more concrete and enforceable in order to guarantee international politics’ coordination.

Further, governments of various advanced countries will be confronted to important and increasing needs of financing. At the same time, a high risk of financial vulnerability increased due to the way public debt became connected to the banking sector: whereas governments guaranteed consequent quantities of banking commitments, banks were able to buy consequent quantities of government securities. Consequently, a high risk for financial stability in one of these two sectors will feed a danger in the other one, being able to form a vicious circle, which could amplify risks in all the economy.