While a Grexit has been avoided in the short term, the medium- to longer-term risk remains.
But
in many ways the last few weeks in Greece have been the start of a
bigger battle, a battle on what the eurozone of the future will look
like.
Few now doubt that the institutional architecture of the
zone is flawed. A currency union without a fiscal union was always
vulnerable to these sort of shocks. And, perhaps more crucially, a
currency union in which the banking system is still predominantly
national, rather than European, was always likely to run into problems.
In a more ideal world - in a situation in which Greek banks were
constrained and unable to extent credit - French, German and other
lenders would have stepped into the breach.
It's hard to avoid the thought that the politics of European integration ran ahead of the economics of the underlying reality.
The
last few weeks have exposed a sharp Franco-German divide. On one level,
this is ideological. For France the euro is irreversible, the
culmination of decades of integration. But the German view differs. They
see the single currency as an agreed set of rules and behaviours and,
if someone "breaks" the rules, they can be thrown out.
Their
analysis of the underlying economics of the crisis differs, too. The
Germans believe the tough fiscal rules agreed in 2012 are the answer to
the crisis: legislate that states should be running sound public
finances and these sorts of crises won't appear.
In a more ideal world - in a situation in which Greek banks were
constrained and unable to extent credit - French, German and other
lenders would have stepped into the breach.
It's hard to avoid the thought that the politics of European integration ran ahead of the economics of the underlying reality.
The
last few weeks have exposed a sharp Franco-German divide. On one level,
this is ideological.
For France the euro is irreversible, the
culmination of decades of integration. But the German view differs.
They
see the single currency as an agreed set of rules and behaviours and,
if someone "breaks" the rules, they can be thrown out.
Their
analysis of the underlying economics of the crisis differs, too.
The
Germans believe the tough fiscal rules agreed in 2012 are the answer to
the crisis: legislate that states should be running sound public
finances and these sorts of crises won't appear. Read more: The battle over the eurozone's future - BBC N
