The previous fight against debt and structural crisis in the European Economic and Monetary Union (EMU) makes clear, what is lacking in Europe, namely a lack of strategy. The solution is obvious. The euro zone needs a get-out clause. This would be enough, both the debt crisis and the structural crisis in the euro zone to solve the long term. The apparent insolubility of the euro area seems politically desirable, as the “irreversibility” of EMU membership and it looks economically highly questionable. It acting as an implicit guarantee.
The result is a moral hazard behaviour on the part of the markets and the EMU member states. Thus, a small economy like Greece, ensure extraordinary turmoil. Of course, an exit clause, after a “failure” of the EMU membership would be regulated by law, would have a preventive effect against economic and political turmoil, as well an effect on strengthen the functioning of the euro area. First Financial markets were a possible exit.
Long-term financial markets would play their disciplining function for national fiscal policies again. In addition, the state would reduce demand for debt. The reason is simple: the long-term costs of fiscal misconduct would be placed in the open political competition and accordingly returns the fiscal discipline. An exit clause in the short term would reduce the uncertainty in financial markets and thus facilitate political and economic adjustment processes.
From the perspective of financial markets is a high degree of uncertainty about the distribution of the resulting adjustment costs on the EMU member states in the debt crisis. It comes to the current legal and institutional conditions for the euro area. The bargaining position of the other EMU member states in the debt crisis would be strengthened. Without an exit clause of sanctions, as a rule, there is no truly effective ways to enforce fiscal policy and structural reforms in individual EMU member countries.
An exit clause in the euro area impose today’s adjustment costs for the lack fiscal discipline in earlier periods.
Paradoxically, an explicit opt-out clause for the euro area would mean that the probability of a disintegration of the euro area is not increases. The cohesion, convergence, and the functioning of the euro area would be strengthened by an exit clause.
Whether this will succeed, it not a matter of economy, it is a matter of French-German negotiation skills in crisis management.