Recommendations for Europe

Chapter 2: Switzerland: Relic of the Past, Model for the Future? / Learn from the Swiss approach to diversity management. / Embrace pragmatic compromises as a way of laying firm foundations for common institutions and policies. / Adopt both a common legal and regulatory infrastructure, and a comprehensive and rigorous fiscal system.
Chapter 3: Austerity: Hurting but Helping / Euro area policy-makers should deal with the periphery’s debt overhang / Countries in which the crisis has permanently changed the growth outlookneed to accept some degree of fiscal austerity and embrace downward wage flexibility. / Periphery countries should make their labour markets more flexible. / The fiscal policy framework in the periphery countries should be strengthened to lend more credibility to the fiscal programs.
Chapter 4: Banking Union: Who Should Take Charge? / The ECB’s Comprehensive Assessment of Financial Institutions needs to be as rigorous and transparent in reality as claims suggest it will be. /Clarification of who will pay for the legacy problems revealed by the Comprehensive Assessment is essential. /The list of creditors exempt from bailing-in should be kept short.