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Position paper Topic A: Proposals for debt restructuring programs for any indebted Eurogroup country Background

The financial crisis of 2008 revealed the limits and the fragility of the European monetary union. It made the financial market moved from a “flight to risk” to a “flight to safety”. Within the Euro area, this changed in perception led to disinvestment of countries seen as more likely to default. Indeed, Greece and other peripheral euro countries, perceived as “weaker” than core countries, faced a withdraw of their investors and had to deal with soaring interest rates. The consequence on Greece appeared to be dramatic since the monetary union prevents the government from using a precious tool. Through changing the exchange rate and depreciate our currency, the country could have been more competitive and would have been able to repay its debt at a lower cost. The Greek debt crisis erupted in 2009, constraints the EU to grant several bails out due to a fear of contagion in all peripheral countries. As a result, the “no bail out clause” (Article 125 TFEU) face a current lack of credibility and finding solution to fight moral hazard in the Eurozone is crucial. Moreover, the major part of the bails out received were used to service the debt and did not benefit to the citizen and to relaunch the economy of the country. As Ms. Lagarde, the International Monetary Fund Chief, stated in 2015, “For Greece to succeed, and for any program to fly, a signific...