Chapter

The Eurozone in the Global Financial Crisis

Charles Wyplosz

in The Global Financial Crisis and Asia

Published in print October 2012 | ISBN: 9780199660957
Published online January 2013 | e-ISBN: 9780191748981 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199660957.003.0003
The Eurozone in the Global Financial Crisis

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This chapter contrasts the United States (US) and European situations during the global financial and economic crisis and examines how much of the crisis has been imported by Europe from the US. The chapter argues that Europe never had a chance to avoid contagion from the US. Trade and financial links — some of which operate through third countries, those in East Asia in particular — are simply too powerful. At the same time, domestic conditions were often critical in a number of countries where house prices had generated unsustainable booms, even though there is no European equivalent to subprime lending. The chapter also documents the relatively limited reaction of both monetary and fiscal authorities. The concluding remarks consider the differences that the monetary union has made and their relevance.

Keywords: financial crisis; contagion effect; monetary union; subprime lending; house price boom

Chapter.  6101 words.  Illustrated.

Subjects: Financial Markets

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