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A European perspective on overindebtedness

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  • Nicolas Véron
  • Jeromin Zettelmeyer

Abstract

The euro-area crisis, which nearly destroyed Europe’s Economic and Monetary Union (EMU) in 2011-12, was a result of perverse incentives and inadequate institutions. The perverse incentives included excessive implicit national guarantees of domestic banks, and a lack of clarity on what would happen in case of sovereign debt distress, which was interpreted as an implicit guarantee of euro-area sovereigns by each other. Correspondingly, Europe had no institutions that could credibly...

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  • Nicolas Véron & Jeromin Zettelmeyer, 2017. "A European perspective on overindebtedness," Policy Contributions 22143, Bruegel.
    • Handle: RePEc:bre:polcon:22143
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    File URL: https://www.bruegel.org/wp-content/uploads/2017/09/PC-25-2017.pdf
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    Cited by:

    1. Alexandridis, George & Antypas, Nikolaos & Gulnur, Arman & Visvikis, Ilias, 2020. "Corporate financial leverage and M&As choices: Evidence from the shipping industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).

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