Looking Beyond the Euro Area Sovereign Debt Crisis
Three years into the euro area sovereign debt crisis, investors continue to shun periphery government bonds, European banks are under severe funding pressures in both the dollar and euro private term markets, and the euro area is facing an anemic g...
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| Format: | Brief |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2012/03/15908672/looking-beyond-euro-area-sovereign-debt-crisis http://hdl.handle.net/10986/10050 |
| Summary: | Three years into the euro area sovereign
debt crisis, investors continue to shun periphery government
bonds, European banks are under severe funding pressures in
both the dollar and euro private term markets, and the euro
area is facing an anemic growth outlook. On the face of it,
the scenario portends gloom. But upon closer examination of
the inner workings of the European Union (EU) governance
system, the ongoing adjustment in the banking sector, and
the rewiring of the landscape of euro sovereign debt
markets, the future scenario looks more balanced,
particularly following the conclusion of the protracted
negotiations on Greek bond exchanges under an EU-backed
voluntary private sector involvement (PSI) scheme. As euro
area leaders formulate significant structural reforms to
deal with the continent's longstanding fiscal and
governance shortcomings, this note argues that striking a
balance between market disciplines and centralized
rule-making is the best way forward. |
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