A new view of how Europe should emerge from its current debt crisis cites the guidelines of Alexander Hamilton, the first Secretary of the Treasury for the US (1789 – 1795). There has been ongoing debate for years about just how unified Europe should become.
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Hamilton’s advice may come appropriately into play as Europe considers the creation of a unified banking system to broaden responsibility for expanding sovereign debt in exchange for greater centrality of control.
Hamilton presided over similar discussions with debt-laden states in the 1790s. He offered assimilation of those debts by the federal government in exchange for greater centralization of power. His tenets for offering such are as relevant to the modern-day European crisis as they were for struggling states at that time in US history.
A so-called United States of Europe has been resisted because the components would be individual countries with long-established autonomy instead of individual states who already were part of a unified government.
Europe is considering greater centralized oversight of its banking system as well as greater centralization of political decisions. Such unification for Europe may be its only hope for salvation. Yet, there is much more to overcome in unifying Europe because there currently is no single unification document akin to the US constitution nor is there a Hamiltonian figure to lead such an effort.
But Europe’s options lessen as time goes on and the debt situations of countries like Greece, Spain, and Italy worsen. Europe may have no choice but to forge its own banking union. The creation of such a union would address Europe's issues from a longer-term, structural perspective, ending the ongoing short-term fixes that seem currently to be the only items on the menu.