Publication

The case of Greece has ushered in the second phase of the financial crisis, namely that of sovereign default. After excess spending during the period of easy credit, several euro area members are now grappling with the implosion of credit-financed construction and consumption booms. Which institution would be best placed to design and supervise the tough adjustment program that would justify financial support: the EU or the IMF? This dilemma could be avoided by creating a ‘European Monetary Fund’ (EMF), which would be capable of organizing an orderly default as a measure of last resort.