Report for the IMF on the surveillance of the euro area in the run-up to, and the first years of the crisis

In the context of the cooperation between Bruegel and the Dutch think-tank CPB, Guntram Wolff went to The Hague for a presentation of the report An evaluation of IMF surveillance of the euro area.

The euro-area crisis has exposed deep deficiencies in the governance of European Economic and Monetary Union. However, crisis prevention in, and surveillance of, the euro area are not only the responsibility of European authorities. As members of the International Monetary Fund, all euro-area countries are also subject to regular bilateral IMF surveillance. The currency union as a whole is also subject to regular IMF surveillance.

The report presented at this event analyses the IMF’s surveillance of the euro area. The authors find that it suffered from severe shortcomings in the run-up to the financial crisis, but after the start of the crisis in 2008, IMF surveillance of the euro area greatly improved, with the IMF correctly proposing measures to counter depression risks and warning about banking sector problems. By the time the sovereign debt crisis hit the currency union in early 2010, the IMF was ready to play an influential role. The slow European response meant this was indispensable.

Bruegel and CPB (www.cpb.nl) have been working closely together since early 2011 . Besides knowledge exchange, this cooperation involves presenting each other's work.