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Discussion Paper Details

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Title: The Euro Crisis in the Mirror of the EMS

Author(s): Giancarlo Corsetti, Barry Eichengreen, Galina B Hale and Eric Tallmann

Publication Date: February 2019

Keyword(s): Backstop, Currency devaluation, financial crises and Sovereign and banking risk

Programme Area(s): International Macroeconomics and Finance

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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Bibliographic Reference

Corsetti, G, Eichengreen, B, Hale, G and Tallmann, E. 2019. 'The Euro Crisis in the Mirror of the EMS'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13522