Summary

This thesis contains three chapters that cover the past, present, and future of the euro area. In its first decade, the euro was considered a success. It facilitated European integration by increasing trade and financial linkages and by supporting economic growth. In the aftermath of the Global Financial Crisis however, its inherent fragility became evident. The build-up of macro-economic imbalances, fiscal vulnerabilities, and systemic financial risks resulted in the near collapse of the euro. The first two chapters of this thesis study causes of the build-up of macro-economic imbalances and fiscal vulnerabilities, namely redistributive effects of the euro and a shortage of public safe assets, and suggest policies to improve the stability and resilience of the common currency. The final chapter studies the implications of a recent euro-development, the potential introduction of a digital euro, for commercial banks and systemic financial risks.