Policy Briefs

C. Bastasin: Europe cannot be strong if fragmentation risks linger in the euro area

Officially, the fragmentation risks of the euro area – or the extreme divergence of financial conditions in member states belonging to the euro area - are tackled by the European Central Bank only if they have an impact on the transmission mechanism of the monetary policy. However, the risks of fragmentation affecting the euro area should be considered also for their negative effects on the global role of the euro and for the impact on the euro-dollar exchange rate.

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