Why can’t the IMF negotiate directly with the Eurozone?
The Financial Times picks up on a good idea I’ve also heard Lawrence Summers make: that the International Monetary Fund should insist on negotiating with the Eurozone or EU institutions as a whole, rather than via piecemeal country packages: Rather than sending Europe back to the negotiating table, the G20 should commit the funds, but ...
The Financial Times picks up on a good idea I've also heard Lawrence Summers make: that the International Monetary Fund should insist on negotiating with the Eurozone or EU institutions as a whole, rather than via piecemeal country packages:
The Financial Times picks up on a good idea I’ve also heard Lawrence Summers make: that the International Monetary Fund should insist on negotiating with the Eurozone or EU institutions as a whole, rather than via piecemeal country packages:
Rather than sending Europe back to the negotiating table, the G20 should commit the funds, but with a caveat. Were the IMF to use this money to finance a programme for a country in trouble, the liabilities should not be borne by that individual state, but by the eurozone as a whole.
Having a programme for the eurozone would have other advantages. It would make it easier to negotiate a deal with the central bank – a fundamental part of any IMF programme. A joint and several liability would also make the rest of the monetary union more determined to see the programme succeed. This could lead to a greater effort to address the eurozone’s longstanding imbalances.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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