The Exit from the Sovereign Debt Crisis: National Policies, European Reforms and Monetary Policy

• Author: Ignazio Visco
• Position: Governor of the Bank of Italy
• Pages: 7-16

T EA U R, V. 1 N. 1/2014

7

The Exit from the Sovereign Debt Crisis: National

Policies, European Reforms and Monetary Policy

Ignazio Visco*

1. Foreword

e road to European integration is a long and arduous one; it is not linear: we

often advance step by tiny step, but at times by vigorous leaps. e introduction

of the euro was one such leap; it was a denite advance but it certainly did

not complete the journey. e euro is a currency without a State; this is the

lack it suers from. e divergences, sometimes the didence, that still mark

the relations between the member states weaken the Economic and Monetary

Union in the eyes of the international community and in those of its citizens.

is incompleteness, together with the weaknesses of some member countries,

has fueled the sovereign debt crisis of the euro area. If the weaknesses have

engendered doubts about the sustainability of national public debts, the

incompleteness has raised fears for the integrity of the union, allowed the risk of

redenomination of the area’s nancial assets and liabilities in national currencies

to gather strength, and reintroduced exchange rate risk within a monetary

union, thus further weakening the position of the countries in diculty.

Without political union, European economic governance has been founded

upon budget rules and the ban on rescues between member countries; it

has relied on the pressure of the single market for economic convergence.

However, in many cases the budget rules have not been respected and the

* Governor of the Bank of Italy