SOVEREIGN DEBT IN THE EUROZONE: A proposal for limited cooperative action to generate cross-country liability


The Eurozone crisis has exposed weaknesses in the design of the currency union. Research by Nobel laureate Joseph Stiglitz and World Bank chief economist Kaushik Basu, published in the August 2015 issue of the Economic Journal, argues that the Eurozone''s financial architecture can be improved by amending the Treaty of Lisbon to permit appropriately structured cross-country liability for sovereign debt incurred by Eurozone members. The proposal is summarised here: