The Euro Crisis in the Mirror of the EMS
27 Pages Posted: 19 Feb 2019
Date Written: February 2019
Why was recovery from the euro area crisis delayed for a decade? The explanation lies in the absence of credible and timely policies to backstop financial intermediaries and sovereign debt markets. In this paper we add light and color to this analysis, contrasting recent experience with the 1992-3 crisis in the European Monetary System, when national central banks and treasuries more successfully provided this backstop. In the more recent episode, the incomplete development of the euro area constrained the ability of the ECB and other European institutions to do likewise.
Keywords: Backstop, Currency devaluation, financial crises, Sovereign and banking risk
JEL Classification: E63, F45, G01, N14
Suggested Citation: Suggested Citation