 The European Twin Sovereign Debt and Banking CrisesA chapter in Financial Crisis, Bank Behaviour and Credit Crunch, 2016, pp 19-35 from Springer Abstract: Abstract Europe currently faces a severe economic and financial Great Crisis. It is often described as a sovereign debt crisis, but in fact, it is really a sequence of interactions between sovereign problems and banking problems that caused a severe economic slowdown. It also caused a fragmentation of euro-area financial markets. The genesis of the crisis focuses on the imbalances in European Monetary Union (EMU) countries balance-of-payments, where the TARGET2 payment system became crucial, reflecting stress in the funding of banking systems in crisis-hit countries. The decisions by European leaders to set up a banking union and the announcement, as well as adoption, of non-standard measures by the European Central Bank (ECB) greatly contributed to restoring confidence in the euro-area financial markets, improving market sentiment and reversing the earlier trend towards market fragmentation. Ultimately, an expansion of the European aggregate demand is necessary to promote growth, and to this aim, the role of Germany is crucial. Keywords: Monetary Policy; Euro Area; Real Exchange Rate; European Central Bank; European Monetary Union (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-17413-6_2 Ordering information: This item can be ordered from DOI: 10.1007/978-3-319-17413-6_2 Access Statistics for this chapter More chapters in Contributions to Economics from Springer |
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