On Causes and Outcomes of the European Crisis: Ideas, Institutions, and Reality

We consider future possibilities for finance in Europe on the basis of an attempt to understand its present and its past. The purpose of this paper is thus to explore the relationship between the way in which the financial sector and the economy have been understood in Europe and the consequences both for institutional and policy design and for future possibilities. In particular, we focus on the evolving relationship between the state and the financial sector, especially with respect to the role of the banks in providing society's money. We revisit the thinking behind Maastricht and consider its role in creating the current crisis. We then explore current thinking in the light of the experience of the crisis and its consequences for proposed solutions.