The euro area’s exchange rate policy cannot be seen in isolation from those of the US, Japan, China, and many others. The international dimension of exchange rate policy and its implications for global economic stability came sharply into focus during the 1930s, when a series of competitive devaluations plunged the world into an economic depression.
As the fund would act as lender of next-to-last resort for failing banks (the government would still have to step in if the fund’s resources were exhausted in a crisis), the problem would merely be shifted from the level of government to the level of the fund.