Bas Jacobs on doom loop banks and governments, abolishing fiscal rules, digital euro and climate

In this episode, Paul Buitink talks to Bas Jacobs. Bas is Professor of Economics and Public Finance at the Vrije Universiteit Amsterdam. He also publishes for Vrij Nederland. During the conversation, Bas will elaborate on the causes of the financial crisis of 2007/2008 and the creation of the European fiscal rules. He discusses the origins and shortcomings of the monetary union (euro). He believes that monetary union can also work without political union like in the United States.

He also discussed the current situation of the euro. Bas believes that a problematic situation has arisen due to the entanglement of banks and governments, which he calls the "doom loop". As long as it exists, fiscal rules are needed. When the doom loop is gone and there is a European deposit insurance scheme plus possibilities to resolve bankrupt countries, fiscal rules can disappear as far as he is concerned and it can be left to the market. Countries that budget well then pay a low interest rate and countries that budget poorly pay a high rate. Finally, Bas elaborates on the costs of climate measures, the digital euro and the question of whether the arrival of, for example, a "Neuro" and "Zeuro" can offer a solution to the problems surrounding the euro.