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How Inequality Fueled the Euro Crisis

The common denominator of existing eurozone-reform proposals is the completion of a banking union, which many believe is needed to reduce financial fragmentation and break the vicious circle between banks and sovereign debt. But, while this would be a positive step, it will be incomplete without efforts to reduce inequality.

BRUSSELS – Since the Great Recession of 2007-2009, most economists have begun to regard finance as a key driver of the business cycle. But the precise dynamics are not yet fully understood.