The Euro Crisis in the Mirror of the EMS

27 Pages Posted: 19 Feb 2019

See all articles by Giancarlo Corsetti

Giancarlo Corsetti

University of Cambridge; University of Rome III - Department of Economics; Centre for Economic Policy Research (CEPR)

Barry Eichengreen

University of California, Berkeley; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Galina Hale

Federal Reserve Bank of San Francisco

Eric Tallman

Federal Reserve Banks - Federal Reserve Bank of San Francisco

Date Written: February 2019

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.

Keywords: Backstop, Currency devaluation, financial crises, Sovereign and banking risk

JEL Classification: E63, F45, G01, N14

Suggested Citation

Corsetti, Giancarlo and Eichengreen, Barry and Hale, Galina and Tallman, Eric, The Euro Crisis in the Mirror of the EMS (February 2019). CEPR Discussion Paper No. DP13522, Available at SSRN: https://ssrn.com/abstract=3336780

Giancarlo Corsetti (Contact Author)

University of Cambridge ( email )

University of Rome III - Department of Economics ( email )

via Ostiense 139
Rome, 00154
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Centre for Economic Policy Research (CEPR)

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Barry Eichengreen

University of California, Berkeley ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Galina Hale

Federal Reserve Bank of San Francisco ( email )

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415-974-2168 (Fax)

HOME PAGE: http://www.frbsf.org/economic-research/economists/galina-hale/

Eric Tallman

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

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