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The Euro Crisis in the Mirror of the EMS

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  • Corsetti, Giancarlo
  • Hale, Galina
  • Tallmann, Eric
  • Eichengreen, Barry

Abstract

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.

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  • Corsetti, Giancarlo & Hale, Galina & Tallmann, Eric & Eichengreen, Barry, 2019. "The Euro Crisis in the Mirror of the EMS," CEPR Discussion Papers 13522, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13522
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    Cited by:

    1. Ioannou Demosthenes & Pagliari Maria Sole & Stracca Livio, 2020. "The international dimension of a fragile EMU," Working papers 795, Banque de France.

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    More about this item

    Keywords

    Financial crises; Sovereign and banking risk; Backstop; Currency devaluation;
    All these keywords.

    JEL classification:

    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • G01 - Financial Economics - - General - - - Financial Crises
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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