European Union and Monetary Union in Permanent Crisis II: Scenarios for the future of the euro

Preface and Acknowledgments
Contents
About the Author
List of Abbreviations
List of Figures
1 Introduction
Part I Fiscal Union with Common Debts: The Road to Risk Communitisation?
2 Eurobonds: A Turning Point for Europe
2.1 Eurobonds as a Recurring Proposal for Crisis Solution
2.2 Legal Concerns
2.3 Entry into a Fiscal and Liability Union
2.4 Regulatory Justification
2.5 Possibilities for the Design of Eurobonds
2.6 Possible Advantages of Eurobonds
2.7 Redistribution, Incentives and Capital Misallocation
2.8 Proposed Variants
2.9 Summary
References
3 European Safe Bonds: Pooling at a Snail’s Pace
3.1 On the Importance and Functioning of European Safe Bonds
3.2 Problem Areas
3.3 Alternatives
3.4 Summary
References
4 European Unemployment Insurance
4.1 Basic Considerations
4.2 Andor Plan
4.3 Problematic Aspects
4.4 Entry into a Social Union?
4.5 Temporary Support Mitigating Unemployment Risks in Emergency (SURE)
4.6 Summary
References
5 European Monetary Fund: The EU Commission’s Proposal—Construct Leaves Extensive Room for Maneuver
5.1 History of the EMF, Procedure and Intention of the European Commission
5.2 Transition of the ESM into an EMF
5.3 Changed Decision-Making Structures: EU Finance Ministers and the European Parliament
5.4 Emergency Fund and Backstop for the Bank Resolution Fund (SRF)
5.5 Integration of Additional Funds into the EMF
5.6 The EMF in the Tension Field of Three Conflict Lines
5.7 Summary
References
6 European Reconstruction Fund—Emergency Aid or Permanent Fiscal Union with Joint Debt?
6.1 Next Generation EU: The Way to a Fiscal Union with Transfer Elements
6.2 European Credit Financing—An Overview
6.3 For the Legal Incorporation of an EU Credit Financing
6.4 To Justify the Recovery and Resilience Facility (NGEU) under Article 122 TFEU
6.5 Partial Liability—Guarantees with Joint Liability
6.6 Possible Dangers
6.7 Alternatives
6.8 Summary
References
Part II Monetary Policy in the Service of (Crisis) States—Fiscal Dominance
7 Debt Relief in Times of Need: The ECB as Lender of Last Resort for States?
7.1 Basic Concepts of the Term Monetary State Financing
7.2 Legal Aspects
7.3 Alternative Options for an ECB Debt Relief
7.3.1 Immediate Write-Off
7.3.2 ESCB-Depreciation Bonds or Compensation Claims
7.4 Economic Aspects of Monetization
7.5 Scenario Analysis
7.5.1 Debt Relief in the Amount of the Reconstruction Fund
7.5.2 Debt Relief of 60% of National GDP (2019)
7.6 Summary
References
8 ECB Bonds: An Instrument in Times of Inflation and for State Financing
8.1 Inflation Could Make a Reduction in the ECB’s Money Supply Necessary
8.2 A Rollback of the Extraordinary Monetary Policy is Facing Problems
8.3 What Are Central Bank Bonds?
8.4 History: Central Bank Bonds Are Not New
8.4.1 Experiences of Other Countries Outside the Currency Union
8.4.1.1 Swiss National Bank (SNB)
8.4.1.2 Bank of Korea
8.4.1.3 Bank of Thailand
8.4.1.4 Banco Central de Chile
8.4.2 Central Bank Bonds Before the Third Stage of the Currency Union
8.4.2.1 The Eurosystem Before the Third Stage of the Monetary Union
8.4.2.2 German Bundesbank
8.4.3 ECB Bonds
8.5 Case Study: NB-SV with Different Objectives in Stylized ECB Balance Sheets
8.5.1 Passive Exchange to Absorb Excess Liquidity of Commercial Banks
8.5.2 Balance Sheet Extension Due to Foreign Exchange Purchases
8.5.3 Extension of the Balance Sheet Due to Fiscally Motivated Government Bond Purchases
8.6 Special Aspects of Central Bank Bonds in the EU
8.6.1 Capital Market Union and Reserve Currency
8.6.2 Central Bank Bonds as a Surrogate for Money?
8.6.3 ECB Bonds Are Interest-Bearing—Effects on Seigniorage
8.6.4 Permanent Storage of Government Debt—ECB Bonds as Euro Bonds
8.7 Summary
References
Part III Euro Exit: Legally Possible and Economically Sensible
9 Legal Possibilities for Withdrawal from the Euro and the Reintroduction of Currency Sovereignty
9.1 Historical Comparison of Currency Unions—Circumstances and Influencing Factors of a Disintegration
9.2 Legal Possibilities of Leaving the Euro
9.3 Transfer of Sovereignty over Currency and Establishment of a Currency Statute
9.4 Summary
References
10 Currency Denomination: On the Question of the Currency of Debt in Old Contracts in the Event of Withdrawal from the Euro from a German Perspective
10.1 Basic Legal Relationships
10.2 Legal Consequences of Different Case Constellations
10.2.1 Case a and b: Currency Secession/Separation of a Currency Area
10.2.2 Case c: Currency Fragmentation
10.2.3 Case d: National Parallel Currencies
10.3 Exchange Law and Exchange Obligation
10.4 Summary
References
11 Roadmap for Withdrawal from the Euro: Technical Preparation, Legal and Practical Implementation from the Perspective of a Withdrawing State
11.1 Announcement and Legal Implementation
11.2 Capital Movements Induced by Adaption of a New Currency
11.3 Disintegration Inflation and Exit Competition
11.4 Logistical Challenges
11.5 Exit Costs
11.6 Summary
References
12 Greece’s Withdrawal from the Euro: One Possible Scenario
12.1 Checking the Conditions for a Third Aid Package (2015)
12.2 The State Bankruptcy Triggers a Credit Event
12.3 (Imminent) Economic and Social Chaos in Greece
12.4 “Geuro” on a Government Debt Basis
12.5 Problems Arise Quickly
12.6 Asset-Based Funding of the Neä Drachmä
12.7 Summary
References
13 The Continuity of the European Monetary Union is Called into Question by Italy
13.1 Lack of Potential and Motivation: Withdrawal of the Basis of Trust
13.2 The Trilemma and Options for Action
13.3 Summary
References
14 Mini-Bots: A “Lira” as a Parallel Currency for Italy?
14.1 Mini-Bots/“Liro” on Government Bond Basis
14.2 Rent.M—IOU—“Geuro”—“Liro”: A Comparison
14.3 Will Italy’s Problems be Solved with a “Liro”?
14.4 Dangers for the Eurozone and the EU
14.5 Summary
References
Part IV Alternatives: Parallel Currency and Sovereign Money
15 Parallel Currencies as a Lisbon-Conform Crisis Solution
15.1 To the Starting Position
15.2 Requirements Catalogue for a Crisis Solution
15.3 Admission of National Currencies Parallel to the Euro
15.4 Political and Legal Implementation
15.5 For the Legal Insertion into the European Treaties
15.5.1 Normal Case (A-States)
15.5.2 States in Insolvency (B-States)
15.6 Advantages of the Concept
15.6.1 Compliance with the Prohibition on Aid and Monetary Independence
15.6.2 Economic Stability
15.6.3 Balance Sheet Effects
15.6.4 Repatriation of Euro Cash Balances
15.6.5 Distribution Effects
15.6.6 Practability of the Concept: Acceptance and Cash Emission
15.7 Summary
References
16 Community Currency with a Purchasing Power Guarantee Based on Capital: The Concept of a Hard Euro Backed by Capital
16.1 The Idea of the Compensated Gold Dollar
16.2 Capital-Backed Hard Euro: Characteristics and Introduction
16.3 Mode of Operation and Stability Conditions
16.4 Value Protection Guarantee and Accounting
16.5 Transformation of Monetary Orders
16.5.1 Phase 1: Euro and KHE as Parallel Currencies
16.5.2 Phase 2: KHE as Monopoly Currency
16.6 Independence of the Central Bank and Monetary Policy in the KHE System
16.7 The Monetary System as an Entry into the State Economy?
16.8 A New Monetary System
16.9 Summary
References
Index