Assessing the Effectiveness of the Restrictions Imposed by the Stability and Growth Pact and The European Fiscal Compact – The Case of Romania

The Euro zone’s deficiencies became obvious when the crisis turned permanent. The Euro zone was caught without a supervisory procedure on macroeconomic imbalances, crisis management instruments, adequate banking supervision and sufficient instruments of resolution. The primary reason for these failures is the lack of a fiscal union with an adequate authority over fiscal, structural and banking policies. Attempts to straighten these mistakes were done ad hoc and have so far been insufficient because they have implied a high moral hazard. Financial markets are increasingly aware of these shortcomings, and have begun to rely on the possibility of abolishing the Euro zone.