Two Models for Europe
The eurozone's sovereign-debt crisis is eating its way from the periphery to the core, and the exodus of capital is accelerating. If the eurozone does not want to embrace capital controls, it has only two alternatives: stop the local printing of money, or provide investment guarantees in countries that markets view as insecure.
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MUNICH – Interest rates for public debt within the eurozone have spread once again, just as they did before the introduction of the euro. Balance-of-payment disparities are steadily increasing. The sovereign-debt crisis is eating its way from the periphery to the core, and the exodus of capital is accelerating. Since the summer, €300 billion, in net terms, may well have fled from Italy and France.