Democratic Governance Of The Euro: Two Practical Suggestions

By MATTIAS KUMM

On May 10 my colleague Miguel Maduro and I presented a policy report at a 3-hour High Level Policy Seminar at the EUI in Florence on the Democratic Governance of the Euro, in which the Commission President Barroso was an active participant. The event itself took place under Chatham House Rules, so the following will not say anything about positions taken by participants and merely elaborate on two core points that were featured in the report and that were the focal point of discussion, in the hope that these points might also be of interest to readers of the Verfassungsblog. (The report itself, co-authored by Miguel Maduro, Bruno de Witte and myself, was the result of collaboration of an international group of economists, political scientists and lawyers that formed a working group under the auspices of the Global Governance Center at the EUI.)

The European financial crisis is not just a technical crisis and it will not be resolved a few Council agreements and technical fixes. It raises profound political questions that affect the future of the European Union as a whole. At the heart of the crisis are democratic problems. The crisis is in part the result of democratic failures of the states that the EU needs to help correct. The financial troubles of a few states – in part the unintended consequences of seizing opportunities provided by the internal market – became a problem for all. Furthermore the problem of effectively regulating highly mobile players in capital markets, to ensure that their activities do not burden outsiders with inexorable costs – a democratic problem that can not be effectively solved on the level of Member States – has resulted in significantly worsening state budgetary situations, as banks effectively socialized risks and privatized profits ...

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