Author(s): Daniel Daianu
Date published: Apr 2018
SUERF Policy Note, Issue No 30
by Daniel Daianu, National Bank of Romania
A more robust euro area demands a reconciliation between rules and discipline on one hand, and risk-reduction and risk sharing (private and public) on the other hand. Risk-sharing is to be designed in such a way as to reduce moral hazard while, simultaneously, considering asymmetric shocks, different strengths of national budgets and of member states’ economies, all of which do vary over time. An adequate calibration between rules and risk-sharing, between private and public risk-sharing, is an open question. Only private risk-sharing schemes would not make the euro area more robust since financial markets are too fickle and produce systemic risks recurrently.
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