The Future of the Eurozone

We argue first that the E urozone crisis has left a legacy of unsustainable government debt levels. These will continue to exert a deflationary dynamics in the E urozone except if creditor nations are willing to contemplate a debt restructuring. Second, we argue that the institutional innovations since the start of the debt crisis fall short of what is needed to solve the design failures of the E urozone. In addition, they are not sustainable, mainly because they have led to a situation where bureaucratic institutions have been vested with more responsibilities without a concomitant increase in the democratic legitimacy of these institutions. We conclude that the E uro crisis is not over.