Resumen de Governance and Conditionality: Toward a Sustainable Framework?

Lorenzo Bini Smaghi

• The article examines how conditionality has evolved in the Eurozone during the debt crisis. Four main aspects are examined. The first is the trade-off between adjustment and financing, and in particular the possible resort to debt restructuring in advanced economies. The second is the decision-making process, which is particularly cumbersome in the Eurozone, as it relies largely on intergovernmental agreements and procedures, which proved to be inefficient and slow. The third issue concerns the financing conditions, which have initially been inspired on IMF programs, but proved excessively restrictive for a monetary union where countries cannot devalue in order to regain competitiveness. Finally, the article examines the contents of conditionality, and in particular the recent emphasis on structural reforms as a way to strengthen the supply side. A more sustainable framework requires greater political integration, in particular in the fiscal sphere, which is not easy to achieve in particular in the midst of a crisis.