Tuesday, 26th March 2013
The Mutating Euro Area Crisis
Source: European Central Bank
From Executive Summary:
The sovereign debt crisis has been – and remains – a traumatic event in the still short history of the euro area. This paper shows that it cannot be interpreted as a unitary phenomenon: the crisis is a mix of several harmful factors that are distinct but interlinked. It has also mutated over time along a succession of phases. There were flaws in the design of Economic and Monetary Union (EMU) and the nature of the prevailing shocks has changed, becoming slow-moving, cumulative imbalances that are very difficult to handle in a monetary union. Some argue that responsibility for the crisis can be lain at various doors. Policy-makers, banks, households, firms and others can be faulted for their exuberance and misjudgement. Therefore, with hindsight responsibilities for the crisis are quite diffused, and incidentally most economists failed to see it coming too. Moreover, once the sovereign debt crisis had erupted, there was no crisis management framework and no financial backstop for either sovereigns or banks. The ensuing dysfunctional policy debate and the fractious national responses were also harmful. Understandably, national disaffection rose, as did scepticism about the euro area.
The aim of this paper is to articulate some thoughts on the various dimensions of the crisis without claiming to offer a coherent and conclusive view either of the crisis or the future of the euro area. The crisis is a catalyst for change, the full effects of which is slowly becoming apparent. Understanding the reform efforts under way will help rebalancing the views of both sceptics and advocates.
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Having begun his career in academic libraries, Adrian Janes has subsequently worked extensively in public libraries, chiefly in enquiry work as an Information Services librarian. In this role he has had particular responsibility for information from both the UK Government and the European Union. He wrote a detailed report on sources for the latter which was published by FreePint in 2007, and has contributed articles to FreePint and ResourceShelf. He is involved in training in information literacy and the use of online reference resources.
A Contributing Editor to DocuTicker, he also write reviews for Pennyblackmusic.
Adrian can be reached at email@example.com
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