In a research project underway with Charles Wyplosz at the Graduate Institute in Geneva, we examine key factors critical for maintaining European monetary union. Our aim is to demonstrate the importance of additional policies beyond those addressing monetary and price stability. At the same time, our research does not suggest that states in the Eurozone should be coerced into deeper political integration in order to preserve the Euro. In fact, closer union in the political realm has not been supported by existing scholarship on club theory.
According to club theory, there are other options for political actors seeking durable solutions to the Eurozone crisis. The factors explored by our joint research include fiscal policy, financial supervision, monetary policy and debt restructuring. For fiscal policy, we expect that political actors may devise solutions in decentralized ways relatively independent of supranational institutions. On the other hand financial supervision and monetary policy entail guiding roles for supranational institutions or greater centralization. Lastly, with debt restructuring, political actors may choose a decentralized or centralized solution however our work indicates better outcomes for a centralized solution to debt restructuring.