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2. European leadership is limp, but Merkel on steroids is not the answer
- Author:
- Paola Subacchi
- Publication Date:
- 09-2012
- Content Type:
- Journal Article
- Institution:
- Chatham House
- Abstract:
- There is a sense of frustration and impotence in watching the eurozone crisis unfold. Non-Europeans cannot understand why tackling the crisis has proved so hard. On a recent trip to China a senior central banker asked me: 'Why don't you Europeans get on with it? You know what you need to do. Just do it.' In the narrative of the eurozone crisis, slow action has come to epitomise poor leadership.
- Political Geography:
- China and Europe
3. New Ideas for the London Summit: Recommendations to the G20 Leaders
- Author:
- Paola Subacchi, Robin Niblett, and Alexei Monsarrat
- Publication Date:
- 03-2009
- Content Type:
- Working Paper
- Institution:
- Chatham House
- Abstract:
- What started last year as a growing international credit crunch and, by September, a global banking crisis has now spread into the real economy. International trade, investment and economic growth are all contracting. A drastic curtailment of credit, collapsing global demand and a loss of trade finance is having a devastating economic effect on both the developed and developing worlds, especially those economies that are heavily dependent on exports.
- Topic:
- International Relations, International Cooperation, International Organization, International Trade and Finance, and Treaties and Agreements
- Political Geography:
- Europe and London
4. Is the Euro Ready for 'Prime Time'?
- Author:
- Benjamin J Cohen and Paola Subacchi
- Publication Date:
- 07-2008
- Content Type:
- Policy Brief
- Institution:
- Chatham House
- Abstract:
- When Europe's Economic and Monetary Union (EMU) became effective nearly a decade ago, the euro was seen as having the potential to be the second pillar of the international monetary system. It was expected to share leadership in monetary affairs with the United States. Ten years later, however, the story looks quite different. Although the euro has firmly established itself as an international currency, the degree of change has been considerably less than expected. Europe's joint money remains at a distinct disadvantage in relation to America's greenback, limiting the role it can play in global monetary governance. The euro is not yet ready for 'prime time' and can at best play only a subordinate role to the dollar in the global system. This can be described as a one-and-a-half currency system – certainly not a two-pillar world. The problem lies in the governance structure of EMU. Because the euro is a currency without a country, based on an inter-state agreement, participating members find it difficult to speak with a single voice. The solution lies in a reform of EMU's governing rules and institutions that would put greater emphasis on the euro's external dimension. On the one hand this calls for more proactive management of the currency's exchange rate by the European Central Bank (ECB), together with an explicit commitment by the Eurogroup –the euro zone's informal committee of finance ministers – to undertake effective coordination of national fiscal policies. On the other hand it means designating a single representative of EMU with real authority to speak on behalf of members in international councils. Unless the euro zone can learn how to project power more successfully than it has until now, dual leadership of monetary affairs at the global level will remain out of reach.
- Topic:
- Foreign Exchange
- Political Geography:
- United States and Europe
5. Exploiting Europe's Strong Potential: Governance, Institutions and Policies
- Author:
- Paola Subacchi, Benedicta Marzinotto, and Vanessa Rossi
- Publication Date:
- 01-2008
- Content Type:
- Policy Brief
- Institution:
- Chatham House
- Abstract:
- With the euro approaching the tenth anniversary of its establishment, this is a timely as well as critical moment to review policies and performance. Enough experience of the convergence and adjustment processes has been gained to better understand how they work and what problems have been created rather than solved. As the strengths – and the success – of the euro become more visible, so too do its weaknesses and the conflicts it creates. Are the appropriate mechanisms and governance in place to help manage Europe's economy so that it can realize its potential? Governance is critical because of the institutional complexity of the monetary union. Independent policy targets and policy instruments not only have to be consistent with each other, but also need to be integrated in a nonconflicting framework. There are two threads to this debate: convergence and adjustments across the euro area, and how the region as a whole is performing with regard to the rest of the world. Both imply a new approach to governance. When EMU was established, the euro area comprised 11 founding members. Now it comprises 15 and is slowly expanding. Ten years ago the emergence of China was more a possibility than a reality, while the 'Asian Tigers' were coming to terms with a devastating financial crisis. Now the rise of the emerging market economies and the enlargement of the global economy's playing field pose significant challenges to the competitiveness of the euro area. With the euro now becoming the second pillar of the international monetary system, EMU's external dimension has become very relevant. The way forward needs to blend the traditional concerns for macroeconomic stability and competitiveness with the more recent concern about the role of Europe in the global economy. All these dimensions need to be organized into a coherent agenda. The right policy should be implemented at the right time.
- Topic:
- Economics and Foreign Exchange
- Political Geography:
- Europe