A decade ago, the eurozone was facing a deep economic crisis. The biggest challenge since the creation of the single currency at the turn of the millennium, the crisis revealed a number of deficiencies on the economic side — not to mention a fair amount of undemocratic proclivities.

Since then, the eurozone has gone through a series of reforms, including the establishment of the European Stability Mechanism set to mitigate risks related to the sovereign bond market and offer (conditional) support for member states facing financial difficulties. Mechanisms have also been introduced with the idea of creating a common banking space and increasing the supervisory power of the European Central Bank (ECB) to address contradictions that could threaten the stability of the European banking system. On the fiscal front, various rules and mechanisms have been incorporated into the existing Stability and Growth Pact, pushing eurozone member states — at least nominally — into an even tighter macroeconomic straitjacket.

Even these measures have not resolved the underlying contradictions and tensions clearly visible during the first eurozone crisis of 2010–15. On the back of the COVID-19 pandemic and the war in Ukraine, a fragile economic situation has emerged, characterized by the disruption of global production chains and rising energy prices. This has, in turn, produced inflationary pressures in the eurozone and the European Union as a whole. In the current context — basically a stagflation in the making — the ECB is predictably moving in the direction of a tighter monetary policy, while asset purchase programs are also under revision.