Giancarlo Corsetti and Luca Dedola — Is the euro a foreign currency to member states?

Spain and Britain have similar debt problems. So why does Spain face far higher sovereign-interest rates? Is this only about Eurozone membership? This column argues that Eurozone membership does not fully explain this discrepancy and that, in fact, it is central banks which cannot provide an effective backstop to national debt that are the root cause of high sovereign-interest rates. Eurozone members are more vulnerable to debt crises to the extent that the ECB cannot count on the joint support of national fiscal authorities.

VOX.eu
Is the euro a foreign currency to member states?
Giancarlo Corsetti, Professor of Macroeconomics, University of Cambridge and Programme Director, CEPR, and Luca Dedola, Adviser in the Directorate General Research, European Central Bank; Research Affiliate, CEPR