The asymmetries between the euro-zone countries are structural, not cyclical: This calls for permanent transfers between the countries, not an insurance mechanism

In the traditional analysis, the euro-zone countries are affected by asymmetric shocks. As the common monetary policy cannot respond to these shocks, solidarity between the countries requires an insurance mechanism that has zero cost in the long term: when one country performs worse than the others, it receives transfers, which it pays back when it performs better than the others. But in reality, the euro-zone countries have structural asymmetries, which are permanent. Solidarity between the countries therefore requires permanent transfers from high-growth countries (with higher living standards) to low-growth countries (with lower living standards). Obviously, implementing such permanent transfers is much more complicated than implementing an insurance mechanism.