The past, present, and future of the euro area

This thesis contains three chapters that cover the past, present, and future of the euro area. In its first decade, the euro was considered a success. It facilitated European integration by increasing trade and financial linkages and by supporting economic growth. In the aftermath of the Global Financial Crisis however, its inherent fragility became evident. The build-up of macro-economic imbalances, fiscal vulnerabilities, and systemic financial risks resulted in the near collapse of the euro. The first two chapters of this thesis study causes of the build-up of macro-economic imbalances and fiscal vulnerabilities, namely redistributive effects of the euro and a shortage of public safe assets, and suggest policies to improve the stability and resilience of the common currency. The final chapter studies the implications of a recent euro-development, the potential introduction of a digital euro, for commercial banks and systemic financial risks.