The turmoil affecting southern euro area countries (notably Greece) has ushered in the second phase of the financial crisis: that of sovereign default. It is now time to look for a new framework that allows the Union to deal with the failure of one of its members. In this new CEPS Policy Brief, authors Daniel Gros of CEPS and Thomas Mayer of the Deutsche Bank Group argue for the setting up of a European Monetary Fund. One of the tasks of this EMF would be to manage the insolvency of euro area countries in an orderly way.

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