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Euro decision time
05 June 2012
The flaws in the euro project can no longer managed with piecemeal bailouts. Leaders must now determine the future of the European project. Stephanie Baxter investigates the options
Fiscal Stability Compact
“The Germans should be worried about the weakening of anti-inflationary policies, and the poorer countries must be told they would not be bailed out of the consequences of a single currency, which would therefore devastate their inefficient economies.” Not an assessment by a Eurocrat at a recent summit, but Margaret Thatcher on the dangers of the currency union in 1990. The structural flaws of the euro have been well known and ignored since well before its creation. We are fast approaching the moment when they must be resolved.
The first such inefficient economy to be devastated was of course Greece. Its second national election in barely over a month, on June 17, will decide whether or not the country stays in the euro. To alleviate fears of bankruptcy in the meantime, the European Financial Stability Facility (EFSF) and International Monetary Fund (IMF) provided a second bailout of €18bn.
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