Eurocrisis: Is the cure worse than the disease?

Physician heal thyself? If this were to apply to the European leaders, some believe that the charges of malpractice could apply. Brookings Institution fellow Domenico Lombardi contends that the solutions may, in fact, be exacerbating the financial crisis.

“While countries themselves are mostly to blame for running economic policies that led to the current crisis, the incomplete architecture of the euro area hasn’t helped. It has created unprecedented scope for contagion by exposing each member of the monetary union—if to varying degree—to the vulnerabilities of the other members. Coupled with the lack of a lender of last resort and a limited regional financial safety net, market expectations can quickly become self-fulfilling in the eurozone,” Lombardi writes.

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