Publication:
The Crisis in the Euro Zone : Did the Euro Contribute to the Evolution of the Crisis?

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dc.contributor.authorTreichel, Volker
dc.contributor.authorLin, Justin Yifu
dc.date.accessioned2012-12-21T20:41:04Z
dc.date.available2012-12-21T20:41:04Z
dc.date.issued2012-07
dc.description.abstractThe simmering sovereign debt crisis in the Euro Zone represents a looming threat to the recovery of the world economy and could lead to a renewed global financial crisis. The purpose of this paper is to analyze the root causes of the crisis in Europe and assess the extent to which it was driven by the global financial crisis and by factors internal to Europe, notably the adoption of the common currency. Adoption of the euro led to convergence of interest rates in periphery countries to the levels in core countries and, in combination with rising capital inflows owing to greater financial integration, set off a consumption and real estate boom in periphery countries, leading to higher growth and increases in government revenue and spending. The resulting real appreciation led to a loss of competitiveness in periphery countries, adversely affecting export performance and causing rising current account imbalances. While the fiscal position remained manageable before the crisis owing to rising revenue, the recession brought about by the global financial crisis led to the burst of real estate bubbles and a financial sector crisis and to sharply increased budget deficits and worsened debt indicators and triggered the sovereign debt crisis. Core countries, in particular Germany, maintained a competitive edge through wage restraint allowing them to increase exports to periphery countries, while their banks profited from increased lending to non-core countries. In sum, the euro exacerbated intra-European imbalances whose unsustainability became evident in the aftermath of the global financial crisis and triggered the current sovereign debt crisis.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/08/16607788/crisis-euro-zone-euro-contribute-evolution-crisis
dc.identifier.doi10.1596/1813-9450-6127
dc.identifier.urihttps://hdl.handle.net/10986/12017
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;6127
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCOUNTING
dc.subjectADVERSE SHOCKS
dc.subjectAGGREGATE DEMAND
dc.subjectAMOUNT OF CREDIT
dc.subjectANNUAL GROWTH
dc.subjectASSET CLASSES
dc.subjectASSET PRICES
dc.subjectBAILOUT
dc.subjectBALANCE OF PAYMENTS
dc.subjectBALANCE OF PAYMENTS CRISIS
dc.subjectBALANCE SHEET
dc.subjectBALANCE SHEETS
dc.subjectBANK BORROWING
dc.subjectBANK DEPOSITS
dc.subjectBANK FOR INTERNATIONAL SETTLEMENTS
dc.subjectBANK HOLDINGS
dc.subjectBANK LENDING
dc.subjectBANK LIQUIDITY
dc.subjectBANK POLICY
dc.subjectBANKING CRISIS
dc.subjectBANKING SECTOR
dc.subjectBANKING SYSTEM
dc.subjectBANKING SYSTEMS
dc.subjectBASIS POINTS
dc.subjectBILATERAL TRADE
dc.subjectBILLS
dc.subjectBOND
dc.subjectBONDS
dc.subjectBORROWING COSTS
dc.subjectBUDGET DEFICIT
dc.subjectBUDGET DEFICITS
dc.subjectBUSINESS CYCLE
dc.subjectCAPITAL ACCOUNT
dc.subjectCAPITAL ACCOUNT LIBERALIZATION
dc.subjectCAPITAL ACCOUNT TRANSACTIONS
dc.subjectCAPITAL CONTROLS
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL INFLOWS
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCENTRAL BANK
dc.subjectCOMMERCIAL BANK
dc.subjectCOMMERCIAL BANK LOANS
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMON CURRENCY
dc.subjectCOMPETITIVE EDGE
dc.subjectCONSOLIDATION
dc.subjectCORE INFLATION
dc.subjectCREDIBILITY
dc.subjectCREDIT BOOM
dc.subjectCREDIT BOOMS
dc.subjectCREDIT DERIVATIVES
dc.subjectCREDIT EXPANSION
dc.subjectCREDIT EXPOSURE
dc.subjectCREDIT QUALITY
dc.subjectCREDIT WORTHINESS
dc.subjectCURRENCY
dc.subjectCURRENCY RISK
dc.subjectCURRENCY UNION
dc.subjectCURRENCY UNIONS
dc.subjectCURRENT ACCOUNT
dc.subjectCURRENT ACCOUNT BALANCE
dc.subjectCURRENT ACCOUNT DEFICIT
dc.subjectCURRENT ACCOUNT DEFICITS
dc.subjectCURRENT ACCOUNT IMBALANCES
dc.subjectCURRENT ACCOUNT POSITIONS
dc.subjectCURRENT ACCOUNT SURPLUS
dc.subjectDEBT BURDEN
dc.subjectDEBT CRISIS
dc.subjectDEBT SUSTAINABILITY
dc.subjectDEBTS
dc.subjectDEFAULTS
dc.subjectDEPOSIT
dc.subjectDEPOSIT MONEY BANKS
dc.subjectDERIVATIVES
dc.subjectDISPOSABLE INCOME
dc.subjectDOMESTIC CONSUMPTION
dc.subjectDOMESTIC DEMAND
dc.subjectDUTCH DISEASE
dc.subjectEARNING ASSETS
dc.subjectECONOMIC CONTRACTION
dc.subjectECONOMIC CRISIS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC POLICY
dc.subjectEMERGING MARKETS
dc.subjectEQUITY MARKET
dc.subjectEURO ZONE
dc.subjectEUROPEAN CENTRAL BANK
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATE FLUCTUATIONS
dc.subjectEXCHANGE RATE RISK
dc.subjectEXPENDITURE INCREASES
dc.subjectEXPORT COMPETITIVENESS
dc.subjectEXPORT GROWTH
dc.subjectEXPORT MARKET
dc.subjectEXPORT PERFORMANCE
dc.subjectEXPORTER
dc.subjectEXPOSURES
dc.subjectEXTERNAL BALANCES
dc.subjectEXTERNAL COMPETITIVENESS
dc.subjectEXTERNAL DEBT
dc.subjectEXTERNAL INDEBTEDNESS
dc.subjectEXTERNAL POSITION
dc.subjectFINANCES
dc.subjectFINANCIAL CONTAGION
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEEPENING
dc.subjectFINANCIAL FLOWS
dc.subjectFINANCIAL INSTABILITY
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INSTRUMENTS
dc.subjectFINANCIAL INTEGRATION
dc.subjectFINANCIAL LIBERALIZATION
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL OPENNESS
dc.subjectFINANCIAL SERVICES
dc.subjectFINANCIAL STABILITY
dc.subjectFINANCIAL STUDIES
dc.subjectFINANCIAL SYSTEM
dc.subjectFISCAL BALANCES
dc.subjectFISCAL DEFICIT
dc.subjectFISCAL DEFICITS
dc.subjectFISCAL DISCIPLINE
dc.subjectFISCAL POLICIES
dc.subjectFISCAL POLICY
dc.subjectFISCAL POSITION
dc.subjectFOREIGN ASSETS
dc.subjectFOREIGN BANK
dc.subjectFULL LIBERALIZATION
dc.subjectGOVERNMENT DEBT
dc.subjectGOVERNMENT DEFICIT
dc.subjectGOVERNMENT DEFICITS
dc.subjectGOVERNMENT EXPENDITURE
dc.subjectGOVERNMENT REVENUE
dc.subjectGOVERNMENT SPENDING
dc.subjectGROWTH PERFORMANCE
dc.subjectGROWTH RATE
dc.subjectGROWTH RATES
dc.subjectHOLDING
dc.subjectHOUSING
dc.subjectHOUSING PRICES
dc.subjectINDEBTED COUNTRIES
dc.subjectINDEBTEDNESS
dc.subjectINFLATION
dc.subjectINFLATION RATES
dc.subjectINTEREST RATE
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL CAPITAL
dc.subjectINTERNATIONAL CAPITAL MARKETS
dc.subjectINTERNATIONAL ECONOMICS
dc.subjectINTERNATIONAL INVESTMENT
dc.subjectINTERNATIONAL SETTLEMENTS
dc.subjectINTERNATIONAL TRADE
dc.subjectJUDICIAL INDEPENDENCE
dc.subjectLENDER
dc.subjectLEVERAGE
dc.subjectLEVY
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY RISKS
dc.subjectLOAN
dc.subjectLONG-TERM BOND YIELDS
dc.subjectLOSS OF COMPETITIVENESS
dc.subjectMARKET SHARE
dc.subjectMARKET SHARES
dc.subjectMARKETABLE SECURITIES
dc.subjectMONETARY FUND
dc.subjectMONETARY POLICY
dc.subjectMONETARY UNION
dc.subjectMORTGAGE
dc.subjectMORTGAGE LOANS
dc.subjectMORTGAGE MARKET
dc.subjectMORTGAGE MARKETS
dc.subjectNATIONAL CURRENCIES
dc.subjectNON PERFORMING LOANS
dc.subjectNONPERFORMING LOANS
dc.subjectOPTIMUM CURRENCY AREAS
dc.subjectPOLITICAL ECONOMY
dc.subjectPOOR ASSET QUALITY
dc.subjectPORTFOLIO
dc.subjectPRICE INCREASES
dc.subjectPRIVATE CONSUMPTION
dc.subjectPRIVATE CREDIT
dc.subjectPRIVATE INVESTMENT
dc.subjectPRIVATE SECTOR BANKS
dc.subjectPROFITABILITY
dc.subjectPROPERTY INVESTMENT
dc.subjectPUBLIC DEBT
dc.subjectRATE OF RETURN
dc.subjectREAL APPRECIATION
dc.subjectREAL EFFECTIVE EXCHANGE RATE
dc.subjectRECESSION
dc.subjectREGULATORY AUTHORITIES
dc.subjectRISK AVERSION
dc.subjectRISK MANAGEMENT
dc.subjectRISK MANAGEMENT TOOLS
dc.subjectRISK PROFILE
dc.subjectRISK TRANSFER
dc.subjectSHARE OF ASSETS
dc.subjectSHORT-TERM DEBT
dc.subjectSINGLE CURRENCY
dc.subjectSOLVENCY
dc.subjectSOVEREIGN DEBT
dc.subjectSTAMP DUTIES
dc.subjectSTANDARD DEVIATION
dc.subjectSTOCK MARKET
dc.subjectSTRUCTURAL REFORMS
dc.subjectSUPERVISION OF BANK
dc.subjectSUPPLY OF CREDIT
dc.subjectSURPLUSES
dc.subjectTAX
dc.subjectTAX INCREASES
dc.subjectTRADE SURPLUS
dc.subjectTRADE UNIONS
dc.subjectWAGES
dc.subjectWEALTH EFFECT
dc.subjectWORLD ECONOMY
dc.titleThe Crisis in the Euro Zone : Did the Euro Contribute to the Evolution of the Crisis?en
dspace.entity.typePublication
okr.crossref.titleThe Crisis in the Euro Zone: Did the Euro Contribute to the Evolution of the Crisis?
okr.date.disclosure2012-07-01
okr.date.doiregistration2025-04-10T10:15:57.685573Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/08/16607788/crisis-euro-zone-euro-contribute-evolution-crisis
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.guid198401468331817873
okr.identifier.doi10.1596/1813-9450-6127
okr.identifier.externaldocumentum000158349_20120815154113
okr.identifier.internaldocumentum16607788
okr.identifier.reportWPS6127
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/08/15/000158349_20120815154113/Rendered/PDF/WPS6127.pdfen
okr.region.administrativeEurope and Central Asia
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicPrivate Sector Development::Emerging Markets
okr.topicFinance and Financial Sector Development::Access to Finance
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublication6f9860c3-5c17-54f1-92fb-9f5055cc0038
relation.isAuthorOfPublication.latestForDiscovery6f9860c3-5c17-54f1-92fb-9f5055cc0038
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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