„The International Monetary Fund (IMF) played a ground-breaking role in understanding the financial-sector dynamics of the euro-area crisis. It was the first public authority, and one of the first more generally, to acknowledge the role of the bank-sovereign vicious circle as the central driver of contagion in the euro area. It was the first public authority to articulate a clear vision of banking union as an essential policy response, building on its longstanding and pioneering support of banking policy integration in the European Union.“
Was the IMF really the first public authority to highlight the risky dynamics of the Eurozone? Well, not quite. The European Commission itself, with the Delors Report of 1989, had pointed out the structural insufficiencies of the Eurozone. Karl-Otto Pöhl, a former Bundesbank President and member of the Delors commission, later commented: „When the report was formulated, I did not think that a monetary union would become reality in the foreseeable future. I thought perhaps sometime in the next hundred years. I thought it was improbable that other European countries would simply accept the model of the Bundesbank“.
Well, Pöhl was wrong. Very expensively wrong!