The European debt crisis: How did we get into this mess? How can we get out of it?

Arbeitspapier

By any measure, the European Monetary Union and the European Union are in a deep hole. In the summer of 2011 we came uncomfortably close to an uncontrolled sovereign default of an EU country, a member of the European Monetary Union, hardly ten years after the common currency project was launched. In the months that followed, Greece was brought back from the precipice, but by the time of this writing has accumulated sovereign indebtedness of more than €380b or more than 170% of the country's gross domestic product. By current estimates, more than half of this debt is held by foreigners, and mostly by foreign official institutions. How could a country with less than 2% of EU output be the source of such great concern? Quite simply, because in the meantime Ireland, Portugal, Spain and Italy (which along with Greece, are known as the GIIPs countries, or the PIIGS in less politically correct circles) have all spent significant time at the financial edge, with borrowing costs rising enough to threaten the integrity of the Eurozone banking system, the mechanism of payments, the European Central Bank and the common currency itself. In my view, we are still not out of the hole, even though most recent events may belie that assessment.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB 649 Discussion Paper ; No. 2013-019

Classification and Topics

• Classification: Wirtschaft ; International Monetary Arrangements and Institutions ; International Lending and Debt Problems ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
• Subject: euro sovereign debt ; NEURO ; European integration

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Burda, Michael C.
• Event: Veröffentlichung
• (who): Humboldt University of Berlin, Collaborative Research Center 649 - Economic Risk
• (where): Berlin
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/79629
• Last update: 10.03.2025, 11:45 AM CET