Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339064 
Authors: 
Year of Publication: 
2025
Series/Report no.: 
Working Papers No. 251229
Publisher: 
Romanian Academy, National Institute for Economic Research, Bucharest
Abstract: 
This article is focusing on the economic literature attempting to solve the problem of the impossible trilemmas of the euro area, by reconciling the relations between the three essential pillars - supranational monetary independence, national fiscal independence and the no bail-out clause applied in the union of states with single currency. The analyses carried out show that the first countries to fall victim to the economic and financial crisis where the least developed with high levels of public debt and which did not respect the nominal convergence criteria. The wide range of measures taken following the crises aimed not only at economic recovery, but also at significant changes in the architecture of the essential pillars and the relations between them by applying a mix of policies to relax these restrictive relations and accompanied by measures to respect financial and fiscal discipline. On the other hand, in order to resolve critical moments of financial balances, including insolvency, special intervention fund and financial facilities were created. It was the transition from the no bail-out clause to the explicit bail-out regime. The last section also reveals the existence of a significant upward trend in measures and reforms which support increasing efficiency of actions and fiscal competences at the EU and member state levels. The text emphasizes the EU's contribution to simplify and modernize the fiscal system of the member states. In the new conditions, fiscal policy should no longer be seen as a state of opposition between the common fiscal policy and the sovereign fiscal policy, but rather as a state of cooperation and support given to the member states under the conditions of the wide application of the principles of subsidiarity and proportionality.
Subjects: 
impossible trilemma
essential pillars
single currency independence
national fiscal independence
no bail-out clause
explicit bail-out regime
insolvency
compatibility
crisis
mix policies
quantitative easing
financial funds and facilities
principle of subsidiarity
JEL: 
A12
B41
E32
E42
E63
E52
E58
F02
F6
H2
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.