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Volume 52, May/June 2017, Number 3 | pp. 154-159

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Risk Reduction, Risk Sharing and Moral Hazard: A Vaccination Metaphor

Frank Vandenbroucke

Nearly all monetary unions are true “insurance unions”: they not only centralise risk management with regard to banks, they also centralise unemployment insurance. The European Economic and Monetary Union (EMU) is the one exception, but it is gradually developing policies driven by the need for mutual insurance, notably in its progress towards a Banking Union. This paper focuses on unemployment insurance; it sketches the rationale for a degree of centralisation that would create a lean insurance union, addressing the risk of large economic shocks.

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