• Eurozone;
  • Portuguese fiscal crisis;
  • currency competition

The analysis of the structural causes of the Portuguese crisis points to a mix of internal and external factors that reinforced each other. Among the external factors were the perverse incentives posed by the current institutional setting in the EU and the single currency. These have wider implications for the eurozone in that the long-term sustainability of the eurozone will require more effective operation of internal adjustment mechanisms. Additionally, the implementation of monetary competition in the eurozone is suggested as an alternative to the current path towards greater centralisation.