The eurozone crisis, which erupted only a few years after the outbreak of the global financial and economic crisis originating from the U.S. housing market debacle, has revealed weaknesses in the regional as well as global frameworks for financial and economic crisis prevention.

My concern about international institutions' surveillance of the eurozone was first expressed in a short commentary I wrote in January 2007 in response to a speech a month earlier in Australia by Mervyn King, then governor of the Bank of England. In that speech, King had argued that the International Monetary Fund should conduct surveillance of macroeconomic policy and that the Organization for Economic Cooperation and Development should focus on surveillance of structural policies.

In the commentary, I argued that utmost care would be required in rationalizing IMF and OECD surveillance activities so that it doesn't result in weakening the surveillance of interactions between macroeconomic and structural policies. To clarify, I noted that large rises in unit labor costs in several countries persisted even after they had joined the eurozone. I observed that they had weakened their international competitiveness and worsened external current accounts, and that the divergence of their unit labor cost performance from sustained declines of such cost in Germany pointed to the emergence of an underlying threat to the viability of the euro system with adverse consequences for global macroeconomic stability.