Persistent institutional malfunctioning in the Eurozone

Giordano, Matteo; Lapavitsas, Costas

Abstract

Institutional change in the Eurozone is driven by the need to ensure the immediate survival of the euro rather than confronting the structural weaknesses of the common currency. The failure to deal with underlying weaknesses is demonstrated by the policy of “selective support”, whereby markets and instruments considered vital for the survival of the euro are often adopted under pressure. This type of support is most prominently demonstrated by the TARGET2 clearing system within the Eurosystem of central banks. The system allows the euro to survive but also facilitates the rise of intra-EMU imbalances, as is reflected in divergent claims and liabilities of member states, leading Germany to accumulate intra-EMU claims on others. Instability thus becomes entrenched in the Union, while Germany maintains a hegemonic position.

Citation

Giordano, M., & Lapavitsas, C. (2023). Persistent institutional malfunctioning in the Eurozone. The Japanese Political Economy, 49(4), 324-345. https://doi.org/10.1080/2329194X.2023.2289883

• Journal Article Type: Article
• Acceptance Date: Dec 5, 2023
• Publication Date: Dec 30, 2023
• Deposit Date: Feb 10, 2024
• Publicly Available Date: Feb 10, 2024
• Journal: The Japanese Political Economy
• Print ISSN: 2329-194X
• Electronic ISSN: 2329-1958
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 49
• Issue: 4
• Pages: 324-345
• DOI: https://doi.org/10.1080/2329194X.2023.2289883
• Keywords: Eurozone; European Central Bank; Eurosystem; institutions; TARGET2
• Publisher URL: https://www.tandfonline.com/doi/full/10.1080/2329194X.2023.2289883
• Additional Information: Data Access Statement : Data sharing is not applicable to this article as no new data were created or analyzed in this study.