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The Euro Zone Debt Crisis and the Situation of the European Banks


  • José Manuel Duarte Inchausti

    () (Central Bank of Argentina)


The sovereign debt crisis in Europe has deepened so far in 2011 and even more so since mid year. The reason behind this continuous deterioration is a combination of vulnerabilities in macroeconomic fundamentals (including some questionings about debt sustainability in Greece and other countries), misgivings about the effectiveness of the policy responses up to date and also the possibility of a spillover of the negative effects to other sectors and countries. The situation of the European banks is especially relevant due to their exposure to the debts of the economies in distress and to their dependence on wholesale funding. Though the analysis of the banking institutions reveals that their condition is highly heterogeneous, the current interconnection among the banks themselves and with the financial markets in general leads to higher perceived risks for the financial stability in Europe, with a potential impact at global level.

Suggested Citation

  • José Manuel Duarte Inchausti, 2011. "The Euro Zone Debt Crisis and the Situation of the European Banks," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(61-62), pages 141-188, January -.
  • Handle: RePEc:bcr:ensayo:v:1:y:2011:i:61-62:p:141-188

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    References listed on IDEAS

    1. Jorge Carrera & Federico Grillo, 2010. "A Second Stage of the Crisis Characterized by Uncertainty," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(57-58), pages 189-227, January -.
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    More about this item


    banks; Europe; financial crisis; sovereign risk;

    JEL classification:

    • F01 - International Economics - - General - - - Global Outlook
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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