Taken together, however, these developments highlight the dangers inherent in the slow-paced, piecemeal approach to solving the eurozone’s woes. The problem with the current approach to European crisis resolution is that it requires time and overall, ongoing stability and thus relies on a number of pieces falling into place. If those pieces don't fall into place, the approach falters.
Of course, by now the end of the eurozone has been predicted countless times. On occasion, according to those assessments, the monetary union had merely months to live, or only days remained to implement the one big solution to end the crisis. None of these doomsday scenarios have yet to play out, and so far, potentially disruptive events, like the first round of Greek elections in the spring, did not turn out to be major obstacles. But European policymakers would be unwise to disregard the continued potential for and effect of high-impact events.
As the euro-crisis has simmered along, boiling up from time to time, a precarious crisis routine threatens to creep in – one based on piecemeal solutions and stopgap reactions. For sure, contingency plans for some scenarios have been drawn up in finance ministries across the continent. For example, according to newspaper reports, a special working group in the German government has been calculating the costs of a Greek exit from the eurozone. But a so-called Grexit is only the most obvious of a number of potentially harmful developments.
Whether contingency plans can take into account all possible scenarios remains questionable. External shocks such as a hard landing of the Chinese economy or internal surprises like an unexpected decision by the German court could cause major instabilities that may well unravel the current crisis response. A further slip toward a purely reactionary crisis-management routine therefore must be avoided.
Over the past few years, European policy makers have come a long way in reshaping the eurozone’s institutional framework and correcting some of its original design flaws. It is now time to finalize these arrangements. This will not necessarily require the creation of a European nation state.