The study is divided into three parts. Part 1 quantitatively investigates the adjustment paths of key economic variables in the European crisis countries with a particular focus on growth-relevant factors like competitiveness and the nature of fiscal consolidation. The study identifies which countries are still in a problematic state and whether fiscal consolidation has turned out to increase or decrease economic growth. In addition, it is analysed if concerns about moral hazard are justified (i.e. whether adjustment has slowed down in response to EU help being implemented). Part 2 builds on the analyses in the first part and sketches an institutional framework for a long-lasting solution to the problem of (public) debt in Europe: the “Adjustment-Union”. Part 3 focuses on a very important element of the needed institutional makeover of the Eurozone that so far has escaped most discussions and suggestions: the conceptualisation of a sovereign debt restructuring mechanism for the heavily-indebted members of the Eurozone.