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An asset management company for the Eurozone: Time to revive an old idea

Beck, Thorsten, (2017), “An asset management company for the Eurozone: Time to revive an old idea”,  Vox Eu, 24 Απριλίου

The idea of an asset management company for the Eurozone is not new. It is based on the observation that bank fragility across several Eurozone countries, including Ireland, Spain, and Italy, has been at the core of the crisis. In addition, bank fragility has put sovereigns under pressure as well as held back economic recovery. Even worse, the bailout of failing banks has forced several governments, such as those of Cyprus and Ireland, to seek a bailout by the Troika, made up of the ECB, the European Commission and the IMF. In other cases, most prominently that of Italy, high sovereign indebtedness might have prevented the government from taking more decisive action. Given the externalities imposed by banking fragility and access to lender-of-last resort facilities inside a currency union, there is a strong case to be made for a Eurozone solution. What is more, the fact that legacy problems associated with the Eurozone Crisis have not been addressed makes the implementation of the new regulatory framework of the banking union more difficult – both technically, as the new institutional arrangements have to address fragility from the start, and politically, as creditor countries are afraid of having to pay for ‘old sins’.

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