A new policy paper from Bruegel – “A European perspective on overindebtedness”

Autors: Nicolas Véron and Jeromin Zettelmeyer
“The euro-area crisis, which nearly destroyed Europe’s Economic and Monetary Union
(EMU) in 2011-12, was a result of perverse incentives and inadequate institutions. The
perverse incentives included excessive implicit national guarantees of domestic banks, and a
lack of clarity on what would happen in case of sovereign debt distress, which was interpreted
as an implicit guarantee of euro-area sovereigns by each other. Correspondingly…”