Crisis, Response and Innovation in Europe

Abstract:     
The close economic ties between Europe and the United States and the City of London’s crucial global monetary and financial role were the conduits for the lightning-fast spread of the crisis triggered by the sub-prime mortgage defaults in the U.S. and the consequent fall in global real aggregate demand. The effects of this twofold crisis differed among euro area countries, among non-euro European Union countries, and among such neighbouring non-members as Turkey and Russia. The differences appear to have been sharpest in the euro group.

Keywords: euro, subprime crisis, De Larosiere report, derivatives

JEL Classification: E52, E61, F42

Accepted Paper Series