The euro crisis has given rise to a consensus that, in order to function effectively, the eurozone must pursue further integration. Specific proposals include a designated eurozone budget, increased fiscal policy coordination among members, and a eurozone finance minister.

None of this means that eurozone members should be ready to pay whatever cost is needed to keep Greece inside the eurozone. This would obviously amount to a surrender.

That left individual eurozone members exposed to brutal pressure by financial markets at a time when excessive private debt was turned into unsustainable public debt. Suddenly, the eurozone had become a straightjacket.

Broad coverage All banks in the eurozone will be covered by the new European supervisory system. And we will need to bridge the gap between eurozone members and EU members that remain outside the monetary union, some of which may want to participate in the new supervisory mechanisms.

Because individual eurozone members have no monetary policy tools at their disposal, the only way that Germany can reduce its surplus while remaining in the eurozone is to conduct expansionary fiscal policy. The economist Stefan Kawalec has explicitly referred to the current policy mix in the eurozone as currency manipulation.

This does not bother the United Kingdom, which has no desire to join the eurozone. Among eurozone members, however, the need for greater political integration is broadly accepted, and not just by the economic and political elites.

Ever since the eurozone was established, its members have issued official fiscal forecasts that are systematically biased in the optimistic direction. Other countries do this, too, but the bias among eurozone countries is, if anything, even worse than it is elsewhere.

Scotching the Eurozone

Demokratisasi di Eurozone

Optimizing the Eurozone

Poland s Eurozone Tests

Rebalancing the Eurozone

And yet Cameron is right to believe that not all EU members will want or be able to be part of a more integrated eurozone. There will have to be some flexibility if the EU is not to shrink, becoming a smaller eurozone.

All of these changes concern the eurozone s members first, of course, but they are clearly relevant for the wider EU. At the same time, setting eurozone members apart from the wider EU would be inadvisable.

In the Council, as in all cases of enhanced cooperation, only participating members have the right to vote. In the European Parliament, by contrast, all 27 EU members participate in the decision making process, even concerning measures that will affect only the 23 eurozone plus countries (the 17 eurozone members and the six that have agreed to the Euro Plus Pact) a method that could pose a political problem.

Sustaining the Unsustainable Eurozone

Alexander Hamilton s Eurozone Tour

Down with the Eurozone

London vs. the Eurozone

No one doubts that Germany and most other eurozone members would prefer the single currency to continue. Today s uncertainty concerns whether this preference may be overridden by pressing considerations of national politics, or resentment at the slow pace of reform in certain eurozone countries.

Members of the eurozone, however, lacked such an option. European Central Bank President Mario Draghi was eventually able to pursue policies aimed at devaluing the common currency, but not before years of painful austerity, deep recession, social strife, and political instability in many eurozone member countries.

The Government the Eurozone Deserves

Eurozone Budgets Under the Spotlight

Growing Up in the Eurozone

Decision Time for the Eurozone

Golden Rules for the Eurozone

Judgment Day for the Eurozone

The Emerging Economies Eurozone Crisis

Here, eurozone members would collectively opt for a smaller and less imperfect union that includes countries with more similar initial conditions economically, financially, politically, and socially. And, again, there is no easy way to do this, especially given that the eurozone was intentionally designed with no exit in mind.

Signs of Life in the Eurozone

Will Vladimir Putin Bolster the Eurozone?

A Standby Program for the Eurozone

A Survival Strategy for the Eurozone

A Breach in the Eurozone Dike

This new eurozone parliament could be formed either by a subset of members of the larger European Parliament, or by some combination of representatives from the European Parliament and national parliaments. The proposed finance minister, responsible for overseeing fiscal policy in the monetary union, would be responsible to the eurozone parliament.

A European finance ministry should be created, and its head should preside over the Eurogroup (which convenes the finance ministers of eurozone member states). A special Assembly of the European Parliament, comprising the eurozone members, should have powers on the model of a national parliament to legislate and control the executive.

A New Approach to Eurozone Sovereign Debt

Back to the Brink for the Eurozone?

The False Promise of a Eurozone Budget

The other solution is to mutualize the cost of rescue at the margin. States could be involved and accept losses, but catastrophic risks would have to be shared among all eurozone members.

The other steps involve economic restructuring at the national level and political integration of the eurozone. In another commentary, A Centerless Euro Cannot Hold, I concluded that without further profound political and economic integration which may not end up including all current eurozone members the euro may not make it even to the end of this decade.

Indeed, a German proverb to the effect that trust is good, but control is better has been the basis of eurozone leaders policy since the developed world s debt crisis engulfed the single currency s system of governance. The implication is clear trust between the members of the eurozone cannot be taken for granted, but must be earned and maintained.

If southern eurozone countries followed the route of forging a new social deal, they would have to ensure that it ultimately intersects with the paths of the northern European members. While all eurozone countries do not have to converge on a single model, their interdependence means that a pan European social and economic settlement is needed.

But allowing Greece to default and still remain in the eurozone is not an option it would signal that other eurozone countries could amass huge debts, funded by the ECB, without having any intention of repaying. Fiscal responsibility in the eurozone would be fatally undermined.

That is why I believe that these countries and the eurozone more generally would benefit from euro depreciation. Although a weaker euro would not increase their competitiveness relative to Germany and other eurozone countries, it would improve their competitiveness relative to all non eurozone countries.