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    What difference does Euro membership make to stabilization? The political economy of international monetary systems revisited

    Mabbett, Deborah and Schelkle, W. (2015) What difference does Euro membership make to stabilization? The political economy of international monetary systems revisited. Review of International Political Economy 22 (3), pp. 508-534. ISSN 0969-2290.

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    Abstract

    For many political economists, the loss of monetary sovereignty is the major reason for why the Southern periphery fared so badly in the Euro area crisis. Monetary sovereignty here means the ability of the central bank to devalue the exchange rate or to buy government debt by printing the domestic currency. We explore this diagnosis by comparing three countries - Hungary, Latvia and Greece – that received considerable amounts of external assistance under different monetary regimes. The evidence does not suggest that monetary sovereignty helped Hungary and Latvia to stabilize their economies. Rather, cooperation and external assistance made foreign banks share in the costs of stabilization. By contrast, the provision of liquidity by the ECB inadvertently facilitated the reduction of foreign banks’ exposure to Greece which left the Greek sovereign even more exposed. By viewing the Euro area as a monetary system rather than an incomplete state, we see that what is needed for Euro area stabilization is cooperation over banking union, rather than a fully-fledged federal budget.

    Metadata

    Item Type: Article
    Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis, available online: http://wwww.tandfonline.com/10.1080/09692290.2014.916625
    Keyword(s) / Subject(s): Euro crisis, international monetary system, Hungary, Latvia, Greece, German hegemony
    School: Birkbeck Schools and Departments > School of Social Sciences, History and Philosophy > Politics
    Depositing User: Deborah Mabbett
    Date Deposited: 28 Oct 2015 14:07
    Last Modified: 15 Nov 2015 00:11
    URI: http://eprints.bbk.ac.uk/id/eprint/13205

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