External versus domestic debt in the euro crisis

Daniel Gros, 24 May 2011

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Does external debt matter in a monetary union? The case of Portugal illustrates the importance of foreign debt. The risk premium on Portuguese public debt rose continuously until the country was forced to turn to the European Financial Stability Facility (EFSF) for emergency financing. But its numbers on the fiscal side are no worse than those of France.

Topics: EU policies, Europe's nations and regions, Global crisis
Tags: Eurozone crisis, Fiscal crisis

Leveraged buyback: A proposal for the Greek debt overhang

Angelo Baglioni, 21 May 2011

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The debate surrounding the debt overhang faced by Greece is focussing on two different types of debt restructuring:

Topics: EU policies, Europe's nations and regions
Tags: Eurozone crisis, Fiscal crisis, Greece

Eurozone design and management failures

Guillermo de la Dehesa, 18 May 2011

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The sovereign debt crisis has tested, for the first time in its short existence, the resilience of the Eurozone design, governance, and management, showing some of its weaknesses and failures.

Its design was criticised long before the monetary union was created (European Commission 1990). Many academics pointed to three basic design weaknesses.

Topics: EU policies, Europe's nations and regions
Tags: Eurozone crisis, Fiscal crisis

The ECB’s three mistakes in the Greek crisis and how to get sovereign debt right in the future

Jeffrey Frankel, 16 May 2011

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By now just about everybody agrees that the European bailout of Greece has failed (see for example Darvas et al. 2011). The debt will have to be restructured.

Topics: EU policies, Europe's nations and regions
Tags: ECB, Eurozone crisis, Fiscal crisis, Greece

The troika should target the trade and the income balance deficits

Ricardo Cabral, 15 May 2011

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Greece, then Ireland, and more recently Portugal have applied for EU and IMF financial aid. A troika of European Commission, ECB, and IMF officials have negotiated accords for ambitious adjustment programmes with either two or three main components, as mandated by the Eurogroup and the Ecofin Ministers (2010a; 2010b; 2011):

Topics: EU policies, Europe's nations and regions
Tags: ECB, Eurozone crisis, financial aid, IMF

Are Michigan and Illinois like Greece and Ireland?

Francis A. Longstaff, Andrew Ang, 10 May 2011

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US states are a lot like Eurozone nations.

Topics: Financial markets, Global crisis, International finance
Tags: Eurozone crisis, Fiscal crisis

Managing a fragile Eurozone

Paul De Grauwe, 10 May 2011

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A monetary union is more than just a single currency and a single central bank. Countries that join a monetary union lose more than one instrument of economic policy. They lose their capacity to issue debt in a currency over which they have full control.

Topics: EU policies, International finance
Tags: currency union, Eurozone crisis

The R word

Charles Wyplosz, 29 April 2011

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Rumours circulate widely these days. European policymakers talk about a restructuring of public debts in some countries (see for example Portes 2011). Rumours may be unfounded but they are telling of what people think about.

Topics: EU policies, Europe's nations and regions
Tags: Eurozone crisis, Fiscal crisis, Greece, Ireland, Italy, Portugal, Spain

Sovereign Default Risk and Bank Fragility in Financially Integrated Economies

Olivier Jeanne, Patrick Bolton, 25 April 2011

Vox users can download CEPR Discussion Paper 8358 for free here. To learn more about subscribing to CEPR's Discussion Paper Series, please visit the CEPR website.

Journalists are entitled to free DP downloads on request; please contact pressoffice@cepr.org. To learn more about subscribing to CEPR's Discussion Paper Series, please visit the CEPR website.

URL: www.cepr.org/DP8358
Topics: Financial markets, International finance, Macroeconomic policy
Tags: banking, collateral, contagion, default, Eurozone crisis, financial integration, government debt

The lessons from the Icesave rejection

Gylfi Zoega, Jon Danielsson, 27 April 2011

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The population of Iceland has refused – for the second time – to pay the minimum guaranteed deposits of UK and Dutch depositors in its failed Icesave high-interest accounts. This would have reimbursed the governments of the UK and Netherlands for unilaterally compensating savers in Icesave, the failed Icelandic bank operating accounts in these two countries.

Topics: Europe's nations and regions, Global crisis
Tags: Eurozone crisis, Fiscal crisis, Iceland, Icesave, Netherlands, UK

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