The adoption of a single currency in Europe is a pure political project. What we have learned from Greek crisis is that being in the Eurozone means that creditors can destroy a national economy and seize public assets if the government steps out of line. To keep the European project alive, we here call for a fundamental reform on sovereign debt: switching from a goal to which policy is constrained, back to a tool to serve policy aims. In a distressed country, lenders has the power to forces the borrower to accept and to adopt restrictive spending policies that defend their interest at the expense of citizen’s ones. Eventually, this leads inevitably to the loss of autonomy in borrower’s decisions on fiscal policy, spending policy, public properties. If the cause for this degenerative process is the privilege on sovereign debt, then we need to find a new framework that reclassifies the public debt as functional to human development rather than individual profits. A country shall not be allowed to repay a debt that goes beyond its repayment capacity. The maximum payback capacity shall be settled before the credit is granted as a fraction of its primary balance. As such, the amount of primary balance not pledged to the repayment of the debt shall be always available to the government to undertake investments, social or security expenses and to face unexpected events. If this rule were implemented, the capital market would be automatically regulated: the debt that exceeds that threshold would be automatically written-off.
This article offers insights into the eurozone, one of the most challenging experiments toward market and political integration through a single monetary unit—namely, the euro. However, whereas markets might be fully integrated even without a common European currency, the euro and its functional institutions are shrinking sovereignty within member states. Today, the eurozone records the lowest percentage of growth in the world; it is an island of stagnation, deflation, and high unemployment rate. Six years after the beginning of the crisis, most of the European countries have not yet recovered the value of gross domestic product (GDP) recorded in 2008. Dani Rodrik's trilemma states that democracy, national sovereignty, and global economic integration are mutually incompatible. Yet the European Union is even shrinking both democracy and national sovereignty toward a global economic integration. Consequently, either democracy shall raise and abort such political project or euro will shrink democracy to village governance level only. © 2015 Wiley Periodicals, Inc.
This study extends research on the social performance of microfinance institutions. The research methodology is based on Grameen Progress out of Poverty Index™ (PPI™) for Cambodia applied to a sample of borrowers randomly extracted from a Cambodian microfinance institution's loan portfolio. Dataset has been directly collected through in-house interviews. Main questions discussed here are: (1) Is microcredit targeted to poor people? (2) Has the poverty rate of the sample changed in last six months? and (3) What percentage of male vs. female clients is poor? We found an average poverty likelihood of about 8.1%, estimated at the day of the interview, steady over a period of six months and not statistically different between male and female borrowers. This evidence might be related to business geographical location or targeting. Actually, PPI too much relies on asset ownership rather than on cash flows and saving capacity. Despite the general wisdom microcredit is targeted to the "poorest among the poor people", this is utterly consistent with a sound and safe (micro)banking activity, aimed at sustainable results.Here comes a call for a triple bottom line performance evaluation on microfinance institutions: economic, social and environmental effects of their activities.
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