A pernicious chain reaction for the euro zone?

There are two stages to a potentially pernicious chain reaction in the euro zone: First, a loss of confidence in the peripheral euro-zone countries, resulting in private investors no longer wanting to lend to these countries; this forced the ECB to conduct a highly expansionary monetary policy to restore their fiscal solvency (starting with Mario Draghi’s famous “whatever it takes”); Then, under the effect of persistently low interest rates and considerable growth in the money supply, this policy eroded the quality of the euro and began to discourage the holding of euros: this resulted in capital outflows of all types, revealing a lack of confidence in the euro. Saving the euro zone may therefore be leading to a growing distrust of the euro in the medium term.