The break up of the eurozone would be a crisis of apocalyptic proportions, going beyond our financial system. Once the logic of “each man for himself” takes hold, can we really trust everyone to act in a communitarian way and resist the temptation to settle scores in other areas, such as trade? Would you really bet the house on the proposition that if the eurozone breaks up, the single market, the cornerstone of the European Union, will definitely survive? After all, messy divorces are more frequent than amicable ones.
If we are not willing to risk a partial dismantling of the EU, then the choice becomes as stark as can be in the lives of federations: deeper integration, or collapse. Moves to bring greater discipline to member states’ finances are a step forward. When drawing up national budgets, finance ministers will have to show their books to their peers. Members of the eurozone who break the stability and growth pact will face sanctions that are almost impossible to block. Rules may be introduced not as directives but as regulations.
Also, as long as the European Council sets in stone tough new rules, the European Central Bank should become a proper central bank, a lender of last resort that underpins the credibility of the entire eurozone. But more is needed. It is crucial we maintain coherence between the eurozone and the EU as a whole. Instead of organising separate euro summits or exclusive meetings of finance ministers, we can continue the practice from other EU forums where all may attend, but only members vote.