Three solutions are then available to the Government

The German Minister of finance Peer Steinbrück indicated at the meeting of Finance Ministers of the G4 in Berlin that Europeans "and not only Eastern Europe" States may encounter difficulties in refinancing of their debt. Which seemed impractical even a few months ago is more completely: the cessation of payments of the euro area Member State. The Greece, the Ireland, the Spain, Malta record higher risk premia. In parallel, the rating agencies drop their notes on these States, confirming the deterioration of confidence in the signature of the countries concerned. But a State can actually fail in the euro area

The situation is not trivial. The scenario of the bankruptcy of a State issuing its own currency in an open economy is known. The State victim of bad management was more difficult to repay its external creditors in a foreign currency. In this context of growing distrust, interest rates rise to attract non-national lenders and the exchange rate weakens if Exchange rate is floating. If fixed exchange rate regime, the Central Bank defends parity until the relative depletion of its reserves and the eventual abandonment of fixity. In all cases, external borrowing lead public deficits in the local currency.

To deal with this situation, the Government may choose to rely on its own. But do walk snowboarding tickets will generate high inflation and implement a recovery plan of the public accounts without external support request from heavy efforts to the population. More often, he therefore appeal to the international monetary fund. The latter puts at disposal of the Central Bank line of credit with which it will reassure foreign creditors on the ability of the country, and in particular its Government to repay the loans. The country is recovering in a virtuous circle, as the IMF gives this Government the loan under the condition that an economic and financial policy be implemented sustainable.

The situation is more complex in the context of a monetary union as the euro area. Because if defiance did not reach the other countries of the zone, and thus the single currency, the bankruptcy will speak by the inability of the country to issue a loan in euros to a financially sustainable interest rates. Three solutions are then available to the Government. The first is to leave the euro zone, to recreate a Central Bank and its own currency and do walk tickets snowboarding: a costly solution both for the population and the country. It will take in effect for many years before giving the credit to his signature and access to capital at a reasonable borrowing rates markets. Another option, set up a convincing rigour plan for financial markets to the risk of creating social tensions in the country concerned. But such a plan is likely to set a worrying precedent for the other countries of the euro.

The third option is to appeal to the international monetary fund. But the IMF can really lend directly to a State of the euro area The States of the Eurogroup are together the initial shareholders of the IMF and their currency is the second currency of reserve in the world! It's a little like the IMF lent to the State of California. The euro in fact incorporated without creating an essential tool to its functioning, stable financial solidarity mechanism, a European Monetary Fund. The designers of the area thought, wrongly, that the only rules of discipline of the States, penalties would be sufficient to ensure the strength. They have been too confident and not ambitious enough.

The extraordinary European Council of 1 March is an opportunity to finally open the debate on the creation of a European Monetary Fund. Many options are possible. Pool partially sovereign borrowing, as Jean-Claude Juncker has proposed, would reduce the expenses of interest to the community and national level. Otherwise, consider to create a unique for the European Central Bank ease, to authorize a special loan of the European Investment Bank, to allocate an envelope specific to the European Commission in a cyclical stabilisation fund... Whatever the mechanism established, need course match the financial support of conditions similar to those of the IMF programmes.

The current crisis shows how the euro area is at a critical stage of its existence: a single currency, but not economic policy, budget, step of solidarity. To be able to prove its usefulness, the European Union must directly help the most vulnerable States and fund mutually beneficial support plans. The consolidation of the euro area requires passing speed political ambition and economic governance.