The election of Emmanuel Macron as French president in a run-off with a nationalist-populist candidate underlines the need for the Eurozone to reform. It also provides an opportunity – he clearly has a popular mandate for change, not being
tied to one of the traditional French parties. But what should and what can be done at the end of a lost decade for the Eurozone to avoid a second one? Big governance changes require treaty changes, which are politically almost infeasible in the current
environment. But there is lot of small steps that can and that should be taken. Some of these are discussed in a new VoxEU eBook, edited by Francesco Giavazzi
and Agnes Benassy-Quere, to which I contributed.
The different contributors touch on the need to complete banking union and first steps towards a common fiscal policy. In my contribution, I pick up on a recent Vox column and the idea to establish a Eurozone-wide asset management company (bad bank) to finally address the remaining legacy problems and allow for a sustainable economic recovery of the Eurozone. As other contributors,
I also argue for first steps towards common fiscal policy, with the goal of addressing youth unemployment, one of the main social, economic, and political challenges in many Eurozone countries. Most importantly, any policy package to address the deficiencies
in the Eurozone has to address the political identity crisis, the disillusion of large parts of the population with the European project, a topic that Geoffrey Underhill and I have addressed in an earlier