In investors’ perception, the monetary union had turned from a single currency area into a fixed nominal exchange rate system cursed with the classical “peso problem”. Investors required an interest rate premium as a compensation for the risk that the euro might not remain the irreversible currency of the euro area – at least in its current composition.
The global problems we are facing today are complex and not amenable to easy solutions. Many of them require significant and often painful adjustments at the national level, and in a world divided by nation-states, there is no natural constituency for the global economy.