October 2, 2013 Leave a comment
A political storm brewing in Italy has the potential to disrupt the calm that has prevailed in the euro area.
News and views on the euro area's debt crisis
April 28, 2013 Leave a comment
Anti-austerity fever is sweeping Europe as policy makers decide the way to get from crisis to growth involves higher spending. Well, not so fast.
The fever has already spread to the highest levels. At the International Monetary Fund’s recent spring meetings in Washington, IMF Managing Director Christine Lagarde and her deputy, David Lipton, repeatedly urged euro-area countries to focus on investment rather than budget cuts. Read more of this post
April 15, 2013 Leave a comment
The most effective way to block any measure in the European Union is to say it requires a treaty change. This is the sucker punch German Finance Minister Wolfgang Schaeuble delivered at an April 13 meeting with his EU counterparts in Dublin.
According to Schaeuble, the EU can’t make more progress towards setting up a banking union within the existing EU treaties. Germany says that a treaty change is needed to properly separate the banking supervision and monetary policy sides of the European Central Bank, once the ECB takes over supervisory duties for all 17 euro area countries. Read more of this post
April 9, 2013 Leave a comment
Cypriots sitting in the cafes here on Nicosia’s Ledra Street are asking one another if there isn’t an alternative to their island’s bailout.
It has been just weeks since the series of rollercoaster negotiations that produced a deal to support Cyprus, in the process devastating its banks and economic prospects. After the initial shock, the reality of the agreement’s implications is sinking in.
The answer to their question is that there may be another way: Leaving the euro would be a better option for Cyprus if — and only if — it can secure cooperation from its troika of creditors: the International Monetary Fund, the European Commission and the European Central Bank. Read more of this post
March 20, 2013 2 Comments
The only thing worse than Cyprus accepting the rotten bailout program that European policy makers agreed on late last week was Cyprus rejecting it. Yesterday, the parliament voted decisively against the terms of the bailout, with 36 members opposing it, the ruling party abstaining and not a single vote in favor. Read more of this post
March 18, 2013 Leave a comment
There’s nothing like having part of your savings account confiscated overnight to make you feel that your money isn’t safe.
That’s what depositors in Cypriot banks awoke to on March 16, when they found their accounts frozen for at least five days to avoid panicked withdrawals. Read more of this post
February 26, 2013 1 Comment
Italy’s parliamentary election could not have gone worse for the country or the euro area.
It is now possible that in the coming months the currency zone’s third-largest economy will need a bailout from international creditors, at a time when Italy will have no government in place to ask for, or negotiate, a rescue. In case you had any doubts, the euro-area crisis is back. Read more of this post
February 22, 2013 Leave a comment
The European Central Bank this week, for the first time, published details of its former bond-buying initiative, known as the Securities Markets Program. The timing of the release, on the eve of Italy’s Feb. 24-25 elections, is as interesting as the data. Read more of this post
February 21, 2013 Leave a comment
Next week’s parliamentary election in Italy is a make-or-break vote for the country, which for several years has been teetering on the brink of a fiscal crisis.
If Italians choose a government that won’t push ahead with economic reform, or rolls back recent changes that were designed to make the economy more competitive, the country’s ability to repay its debt will be in question.
That would be terrible news for Italy and the euro area as a whole, which might not be willing or able to bail out its third-largest economy. With days to go before the vote on Feb. 24-25, only this much is certain about the outcome: The next government in Rome may be stable or reformist by Italian standards, but it will not be both. Read more of this post