Before the introduction of the Euro, the EU states debated intensely as the fiscal discipline of the Euro members cannot be guaranteed in the long term. The Advisory Council had always pointed out that only those who fulfil the Maastricht criteria should be included in the monetary union.

In the case of Greece was not looking “right”. This confusion in the past does not justify that the Hellenes future may take a special claim for themselves. Greece has a huge budget deficit. It is a fact. Therefore right to demand the capital markets an appropriate risk premium. Now acted as if this was an unpleasant surprise. What should it be surprising? Greece / and nobody else/ must be responsible for its shortcomings.

The disclaimer is part of the business base of the monetary union. Only by different credit ratings of the financial markets, the lack of fiscal discipline in individual countries are largely suppressed. Those who questioned the liability assumed by the higher risk premiums harms everyone. Financing through small contributions could the members in a crisis buy the support of the other.

Bank levy in the market economy approach

The Cabinet decided the first vertex today. The aim should be to contribute to the financial institutions in future crises. All German banks to pay into the fund crisis. 1.2 billion would come together every year. Also, the concept for new instruments in order to rehabilitate ailing banks or to break in case of emergency. Even more important is that the banks for the risks they impose on the taxpayer continue to pay a price.

This is a very market-based solution. It is clear that it will take at an annual volume of 1.2 billion decades before the accumulated funds are sufficient to deny them the burden of a financial market crisis. Given the continued poor profitability of a number of systemically important banks, it is not possible to collect larger amounts.

Finally, it makes no sense, as soon as possible to accumulate a bulging pot: The great danger is that in a few years the tax is suspended in view of the high reserves. Then so is the control function to have such a duty on the risk behaviour of the banks lost.

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Who holds Greek bonds in Germany? EMU infestation the worst thing was to be feared: unsound fiscal policies of members, wrong decisions on the accession of individual countries, the deficit countries refuse adjustment and monetary policy lacks the sanctions. As a result, the euro area is more and more into a tailspin. Thus proved to be true that the absence of a political union cannot be replaced by treaty.

On the other hand, all of these changes alter the fact that the single currency was therefore a success story in the first ten years of its existence. What can or should be done? The Strengthening of the Stability and Growth Pact, for example through national constitutional debt brakes, is in the stars.

A withdrawal of Greece is practically difficult to achieve. After the announcement of the Greek private investors would drive the banks to withdraw their money assets in euros. Small businesses will feel it most. The result is that the Greek banking system would dramatically destabilized. The adaptation process because of withdrawal from the monetary union is far lighter than the stay in the single currency. Greece must arrive or be taking such a drastic remedy.

Must all care but so clearly all be used to fix the conditions for the Greek budget policy? The assistance is no longer avoidable, drastic requirements on the financial policy of Athens are possible. The involvement of the International Monetary Fund wants to Strengthen the binding nature of these conditions. It must be clear that it is not a pleasure to run into such a situation.

Greece should leave monetary union

In a monetary union, the exchange rate is as an instrument to mitigate different accounts of real economic developments. This can, in principle, on the mobility of goods and factors of production (especially labor) and the flexibility of prices (especially wages) are compensated. Existing in the labor markets of the EU mobility barriers and the lack of flexibility of wages should hinder a market in fitting however.

In that regard, there is already a danger that arises political pressure to put more on transfers to compensate for real economic divergences. All politicians have assured that it will not come as part of the monetary union to additional transfers. The criteria for admission should the Monetary Union and the Stability and Growth Pact guarantee.

How these schemes in recent years, especially in relation to Greece, have been applied, is painfully familiar. Greece should withdraw from the monetary union and reintroduce its own national currency (drachma).