In public debate and among economists, there has been an emotional debate whether Germany has profited by the Euro(zone) or not. Prof. Bofinger is an advocate of the European idea and he calls the Eurozone – including all weaknesses – a story of success. He emphasizes that Germany also profited significantly by the creation of the Eurozone. The unemployment rate in Germany is at a record low. After years of crises, the Eurozone is growing again. And the Euro as a common currency prevents economies from exchange rate shocks. Despite of the benefits of the Eurozone, we still have an unfinished building. On the one hand the Eurozone follows a common monetary policy driven by the European Central Bank and on the other hand we have 19 independent fiscal policies. Therefore, the system is always prone to shocks. The main problem is that the member states are not willing to give up the national scope on their fiscal policy.
Concerning the Brexit, Prof. Bofinger draws parallels to the amputation of a healthy leg, by believing that with the proteases one can walk better. Now a lot of people realize that this might be really painful.
At the end, it might be an opportunity for the countries that committed themselves to Europe, to enforce future cooperation in order to stay competitive in the global power triangle.
Check out #12 Episode of the “WUEconomics – outside the box – Podcast” for more details and insights.
Part 3: Talk with Prof. Dr. Peter Bofinger, Head of Chair for Monetary Policy and International Economics at University Würzburg, Member of the Council of German Economic Experts, called for the Commission on Global Economic Transformation (CGET) and one of the most popular economists in the German-speaking area as well as in an international context.