The interplay of sovereign spreads and banks’ fragility in the Eurozone

Damiano Sandri, Ashoka Mody, 23 November 2011

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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:

Topics: Financial markets, International finance
Tags: banks, eurozone, spreads

How much capital do European banks need? Some estimates

Viral Acharya, Dirk Schoenmaker, Sascha Steffen, 22 November 2011

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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.

Topics: Financial markets, International finance
Tags: banks, eurozone, recapitalisation, sovereign debt

The Eurozone needs exit rules

Cezary Wójcik, Christian Fahrholz , 31 October 2011

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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.

Topics: EU institutions, EU policies
Tags: EU, eurozone, exit rules

Is the recent bank stress really driven by the sovereign debt crisis?

Guntram Wolff, 30 October 2011

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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.

Topics: EU policies, Financial markets, International finance
Tags: eurozone, Eurozone crisis, sovereign bonds, stock markets

Resolving the current European mess

Charles Wyplosz, 25 October 2011

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Editors' note: This column forms part of a VoxEU.org eBook 'The Future of Banking', to be published on Tuesday 25 October.

Topics: EU institutions, EU policies, International finance
Tags: ECB, EFSF, eurozone, sovereign debt

ESBies: A realistic reform of Europe's financial architecture

The Undersigned, 25 October 2011

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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.

Topics: EU institutions, International finance
Tags: euro bonds, eurozone, Eurozone crisis, sovereign debt

The European debt crisis: Worrisome delusions

Charles Wyplosz, 19 December 2010

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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.

Topics: EU institutions
Tags: Debt crisis, ECB, eurozone

Ireland’s rescue package: Disaster for Ireland, bad omen for the Eurozone

Barry Eichengreen, 3 December 2010

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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.

Topics: EU policies, Global crisis
Tags: contagion, eurozone, Irish bailout

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.

URL: http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_051.asp
Topics: Macroeconomic policy
Tags: bail-out, eurozone, fiscal sustainability, sovereign default

Greece and the fiscal crisis in the Eurozone

The Editors, 12 October 2010

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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.

Topics: Macroeconomic policy
Tags: bail-out, eurozone, fiscal sustainability, sovereign default

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