Eurozone After the Coronavirus Pandemic: What are the Likely Scenarios?

The European debt crisis has brought about permanent changes in the Eurozone. The no-bailout rule was - de facto - removed, new institutions such as the European Stability Mechanism and the banking union were designed and partially implemented, new monitoring and surveillance schemes such as the macroeconomic imbalance procedure were introduced. In this way, the functioning of the Eurozone has been irreversibly transformed. Now, a new and even more devastating crisis has hit the Eurozone in the form of Covid19 and the resulting economic impact. Will we observe the substantive, if not also formal, infringement of well established principles such as those preventing the ECB from monetizing government deficits, the member states from mutualizing their debt and the Eurozone from becoming a transfer union? To what extent will this infringement be necessary and sufficient to avoid the Eurozone’s implosion? And is it going to be purely temporary or is likely to be long lasting? Given the political dynamics that are under way in the EU member states, will there be enough consensus in support of these policy shifts in both Eurozone’s core and peripheral countries, or will they cause political turmoil?