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The Eurozone Debt Crisis -- The Options Now


Lee C. Buchheit


Cleary Gottlieb Steen & Hamilton LLP - New York Office

G. Mitu Gulati


Duke University - School of Law

October 8, 2012


Abstract:     
The Eurozone debt crisis is entering its third year. The original objective of the official sector’s response to the crisis -- containment -- has failed. All of the countries of peripheral Europe are now in play; three of them (Greece, Ireland and Portugal) operate under full official sector bailout programs.

The prospect of the crisis engulfing the larger peripheral countries, Spain and Italy, has sparked a new round of official sector containment measures. These will involve active intervention by official sector players such as the European Central Bank in order to preserve market access for the affected countries.

This paper surveys the options now facing the sovereign debtors and their official sector sponsors. It concludes that there are no painless or riskless options. In the end, the question may come down to this -- to what extent will the official sector sponsors of peripheral Europe be prepared to take on their own shoulders (and off of the shoulders of private sector lenders) a significant portion of the debt stocks of these countries during this period of fiscal adjustment?

Number of Pages in PDF File: 11

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Date posted: October 8, 2012  

Suggested Citation

Buchheit, Lee C. and Gulati, G. Mitu, The Eurozone Debt Crisis -- The Options Now (October 8, 2012). Available at SSRN: http://ssrn.com/abstract=2158850 or http://dx.doi.org/10.2139/ssrn.2158850

Contact Information

Lee C. Buchheit (Contact Author)
Cleary Gottlieb Steen & Hamilton LLP - New York Office ( email )
One Liberty Plaza
New York, NY 10006-1470
United States
Gaurang Mitu Gulati
Duke University - School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
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