European policymakers are confronting a heightened crisis characterised by a perverse and seemingly intractable interplay between sovereign debt pressures and financial-sector fragilities (Wolff 2011). Three questions arise:
The interplay of sovereign spreads and banks’ fragility in the Eurozone
Damiano Sandri, Ashoka Mody, 23 November 2011
How much capital do European banks need? Some estimates
Viral Acharya, Dirk Schoenmaker, Sascha Steffen, 22 November 2011
The European banking system is freezing up. Several banks are not able to fund themselves in the market. The lack of market confidence in European banks is fed by the ongoing uncertainty about Eurozone sovereign debt (as well as real estate) to which these banks are exposed.
The Eurozone needs exit rules
Cezary Wójcik, Christian Fahrholz , 31 October 2011
With the sovereign debt crisis spreading across Europe and in the run-up to the next EU Summit there is no shortage of suggestions on how to save the Eurozone. Unfortunately, the majority of these suggestions have one of the following flaws.
Is the recent bank stress really driven by the sovereign debt crisis?
Guntram Wolff, 30 October 2011
Stress in the interbank market has increased significantly since July (Figure 1). There is now a significant debate on why this is the case and what would be the best way to address it (Financial Times 2011).1 Many have argued that the sovereign debt crisis isthe most important driver of banking stress in the Eurozone.
Resolving the current European mess
Charles Wyplosz, 25 October 2011
Editors' note: This column forms part of a VoxEU.org eBook 'The Future of Banking', to be published on Tuesday 25 October.
ESBies: A realistic reform of Europe's financial architecture
The Undersigned, 25 October 2011
The current European crisis has exposed several flaws in the design of the Eurozone financial system. It was internally inconsistent. On the one hand, it imposed a ‘no-bail out clause’ ruling out any bailout to ensure that interest rate differentials provide a clear signal about the buildup of imbalances.
The European debt crisis: Worrisome delusions
Charles Wyplosz, 19 December 2010
Lorenzo Bini-Smaghi – Member of the ECB's Executive Board – has produced a brilliant defence of the no-default strategy currently pursued by the Eurozone authorities (Financial Times 2010).
His arguments are straightforward.
Ireland’s rescue package: Disaster for Ireland, bad omen for the Eurozone
Barry Eichengreen, 3 December 2010
The Irish “rescue package” finalised over the weekend is a disaster. You can say one thing for the European Commission, the ECB, and the German government – they never miss an opportunity to make things worse.
Greece and the fiscal crisis in the Eurozone
Willem Buiter, Ebrahim Rahbari, 12 October 2010
CEPR Policy Insight No.51 can be downloaded free of charge from the CEPR website here.
Greece and the fiscal crisis in the Eurozone
The Editors, 12 October 2010
The saga of the Greek public finances continues. But this time, Greece is not the only country that suffers from doubts about the sustainability of its fiscal position. Quite the contrary. The public finances of most countries in the Eurozone are in a worse state today than at any time since the industrial revolution, except for wartime episodes and their immediate aftermaths.
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