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What distinguishes the euro crisis from a ‘normal’ financial crisis? CEPS Commentary, 6 November 2012

Gros, Daniel. (2012) What distinguishes the euro crisis from a ‘normal’ financial crisis? CEPS Commentary, 6 November 2012. [Policy Paper]

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    Abstract

    This Commentary attempts to discern the distinguishing features between the present euro crisis and the financial crisis brought on in the US by the subprime lending disaster and the ensuing collapse of banks and other financial institutions in 2007-08. It finds that whereas the US was able to bring its crisis to an end by socialising the dubious debt and stabilising its valuation so that it could migrate to other investors capable of bearing the risk, this pattern can be only partly repeated in the eurozone, where both debt socialisation and a return to normal risk assessment are more problematic.. It concludes, nevertheless, that the crisis should now abate somewhat given that most risk-averse institutions have by now sold their holdings of peripheral countries’ sovereign debt and especially in light of the ECB’s assurances that it will not allow the euro to disintegrate.

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    Item Type: Policy Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > economic policy
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Commentaries
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 09 Nov 2012 09:05
    Number of Pages: 2
    Last Modified: 09 Nov 2012 09:05
    URI: http://aei.pitt.edu/id/eprint/37318

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