The Liquidity of the Financial System and the Sovereign Debt Crisis in Europe – Is There a Solution?

Nedelcu Monica Letitia ()
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Nedelcu Monica Letitia: Faculty of Economics and Business Administration, ”Alexandru Ioan Cuza” University of Iasi, Romania

Ovidius University Annals, Economic Sciences Series, 2013, vol. XIII, issue 1, 238-243

Abstract: The financial crisis of 2007-2008 has brought to light the liquidity problem of the financial system. Trying to solve this challenge, the members of the European Monetary Union were confronted with the sovereign debt crisis, which exacerbated the gravity of the initial situation. This paper analyses the causes and effects of the sovereign debt crisis as well as the measures taken by the European Central Bank to minimize the negative effects. The analysis is used in order to identify possible solutions for this critical situation. The findings reveal the fact that there is no panacea solution, that situations differ from country to country and that there is no measure only with positive effects. The broader question is which steps have to be taken in order to avoid a worse situation in the long run

Keywords: financial crisis; sovereign debt crisis; European Central Bank; liquidity risk; fiscal policy (search for similar items in EconPapers)
JEL-codes: E62 G01 G12 H12 H63 N24 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ovi:oviste:v:xii:y:2012:i:1:p:238-243

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