From the internal market to a banking union: A proposal by the German Council of Economic Experts

Peter Bofinger, Claudia M. Buch, Lars P Feld, Wolfgang Franz, Christoph M Schmidt, 12 November 2012

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 The European sovereign debt crisis has revealed severe flaws in the design of the internal market. Both private and public borrowers had incentives for excessive borrowing, which have been created by deficits in the regulatory structure of financial markets. Capital requirements for banks were too low and had procyclical effects (Favara and Ratnovski 2012).

Topics: EU institutions, EU policies, Macroeconomic policy
Tags: banking union, ECB, European Stability Mechanism, eurozone

The doomsday cycle turns: Who’s next?

Simon Johnson, Peter Boone, 21 September 2012

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There is a common problem underlying the economic troubles of Europe, Japan, and the US: the symbiotic relationship between politicians who heed narrow interests and the growth of a financial sector that has become increasingly opaque (Igan and Mishra 2011).

Topics: Global crisis, International finance, Politics and economics
Tags: eurozone, financial crisis, Japan, US

The first sovereign debt crisis in the EU

Jon Danielsson, Hermann Oskarsson, 11 September 2012

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Today is not the first time Europe has suffered a sovereign-debt crisis. Twenty years ago another crisis happened, passing without notice except amongst those affected, i.e. the Faroe Islands. The islands accumulated too much sovereign debt, eventually getting hit by a crisis much larger in magnitude than even the worst in the ongoing European crisis.

Topics: International finance, Politics and economics
Tags: eurozone, Faroes, sovereign debt crisis

The EU’s implementation of Basel III: A deeply flawed compromise

Morris Goldstein, 27 May 2012

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By all accounts, EU member countries have for months been debating how to implement the minimum bank capital standards agreed under Basel III. Their arguments have unfolded as the EU works to complete its fourth Capital Requirements Directive and its Capital Requirements Regulation (see Veron 2012).

Three issues have been contentious:

Topics: EU policies, Financial markets, International finance
Tags: banking, BASEL III, eurozone

The European debate on bank capital is not just about Europe

Nicolas Véron, 4 May 2012

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The EU’s finance ministers are furiously debating the piece of banking legislation known as CRD4/CRR (the abbreviations stand for the fourth Capital Requirements Directive and the Capital Requirements Regulation).

Topics: EU policies, International finance
Tags: BASEL III, Capital Requirements Directive, Capital Requirements Regulation, eurozone, financial regulation

The coming revolt against austerity

Charles Wyplosz, 2 May 2012

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It is not just the election of François Hollande in France. Adopting contractionary fiscal policies in the teeth of a double-dip recession never made sense. And yet, public debts are high and markets in endemic panic. The solution must be based on a comprehensive analysis of the situation, not on arcane debates on the strength of the “confidence factor”.

Topics: EU policies, Macroeconomic policy
Tags: austerity, eurozone, fiscal policy

Fiscal consolidation: Too much of a good thing?

John Van Reenen, 27 April 2012

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This week’s political events in the Netherlands and France which look likely to lead to government dissolution, have been interpreted as a set-back for the pace of fiscal consolidation in Europe with popular resentment punishing incumbent leaders (“Leaders in Austerity Backlash” was the headline of the Financial Times on 24 April 2012).

Topics: Macroeconomic policy
Tags: austerity, Bond market, eurozone, fiscal consolidation

Divergence of fortunes in recoveries

Prakash Loungani, M Ayhan Kose, Marco E Terrones, 24 April 2012

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The last global recession was the deepest of the four recessions the world has experienced since World War II. Each recession led to fears of economic apocalypse but the global economy recovered in a year or two. Because of the depth of the last recession, some analysts worried that the world would relive the Great Depression of the 1930s.

Topics: Global economy
Tags: emerging markets, eurozone, recovery

Fiscal austerity and policy credibility

Marco Buti, Lucio R Pench, 20 April 2012

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The renewed phase of tension in Europe, and the Eurozone in particular, since the second half of 2011, with the prospect of a double-dip recession alternating with that of a sovereign-debt crisis, has reignited the debate on fiscal austerity, to which European governments have been committed since the end of the most acute phase of the crisis in 2009.

Topics: EU policies, Macroeconomic policy
Tags: austerity, eurozone, fiscal policy

Is the euro rescue succeeding? An update

Uri Dadush, Zaahira Wyne, 20 April 2012

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The current gyrations of sentiment over government-bond spreads are diverting attention from the real issue – the Eurozone periphery needs a big realignment towards the tradable sector to reignite growth sustainably. 

Topics: EU policies, Exchange rates, Macroeconomic policy
Tags: eurozone, Eurozone crisis, real exchange rates

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