Building Firewalls: European Responses to the Sovereign Debt Crisis

Constantine A. Stephanou

Chapter 4 in International Debt, 2013, pp 127-158 from Palgrave Macmillan

Abstract: Abstract The financial crisis, originally affecting banks and subsequently sovereign borrowers, may be considered as an episode in the continuous confrontation between states and markets. Previous confrontations have led to major adjustments or even breakdowns of international regimes. Market forces were successful at breaking down the Bretton Woods system in 1973, thereby allowing exchange rates to fluctuate freely. Financial innovations, including the securitization of debt, its dispersion resulting from the development of secondary markets and the multiplication of financial derivatives, such as credit default swaps (CDSs), have put added strains on governments and the management of public debt.

Keywords: Euro Area; Credit Default Swap; Sovereign Debt Crisis; Fiscal Discipline; Private Sector Involvement (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-1-137-03057-3_5

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DOI: 10.1057/9781137030573_5

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