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05.07.2017, Europa briefing: Leaving the euro: An emergency exit for the currency union?

The euro does not provide its members with any option to leave. This protects the common currency against speculative attacks on the one hand. The euro crisis demonstrated on the other hand how difficult it is for Eurozone countries to constructively solve economic and fiscal policy conflicts among themselves. Why was the euro designed as a one-way street? What would be the consequences of an exit option? And what alternatives are there to an exit?

Ansprechpartner

Dr. Katharina Gnath

The European Treaties stipulate that the euro is irreversible. There is no option to leave, since the departure of a country would destabilise the entire currency union. Additional departures and thus related losses on euro-denominated financial assets would suddenly be possible. The euro crisis showed, however, that irreversibility also raises problems. It can be difficult for members of the Eurozone to escape an economic crisis, as a Eurozone country cannot devalue its currency or pursue a monetary policy tailored to its needs.

A euro exit does not permanently resolve either debt or economic problems. The governments of Eurozone countries only damage themselves when they regularly play off their national democratic mandates against each other. Instead, Europe needs to legitimise the governance of the common currency democratically on the European level, even if that is very difficult.

Jörg Haas, Jacques Delors Institut – Berlin

The recent years have shown that national sovereignty is difficult to combine with European stability. During and after the crisis, however, debate has raged on what level of budget cuts is appropriate and on whether leaving the currency union might be the lesser evil in some cases. Whether or not the currency union needs an emergency exit was last intensely discussed in connection with the third bailout package for Greece in 2015.

What can be done if a Eurozone country does not recover and the population grows tired of cutting back and implementing reforms? Our "Europa Briefing" draws up three scenarios on how to deal with the dilemma between stability and sovereignty in the euro area in the future, and whether there are alternatives to the "exit" in a crisis.

About our publication series “Europa Briefing”

In the publication series “Europa Briefing”, the Bertelsmann Stiftung and the Jacques Delors Institut – Berlin cover key topics of European politics and present possible scenarios: What is the problem? What might happen next? And what can politics do now?

All the publications of the joint European project with the Jacques Delors Institut – Berlin are available at www.strengthentheeuro.eu