Marcello Minenna, (2018), “A look back: what Eurozone “risk sharing” actually meant”, Financial Times Alphaville, 10 October
The common narrative is that rescue programs have helped deeply troubled countries avoid sovereign bankruptcy or widespread bank failures. But, by avoiding extreme outcomes, these programs also protected the banks of the core countries — Germany and France, in particular — that had accumulated huge exposures to the periphery before the crisis. At the time, risk sharing (however unpleasant) was the best available option for the governments of the core countries. It saved them from intervening (at the expense of their taxpayers) to prop up their own national banking systems.
Relevant Posts
- Peter Bofinger, (2018), «Euro area reform: No deal is better than a bad deal», VoxEU, 15 May
- Roel Beetsma, Martin Larch, (2018), «Risk reduction and risk sharing in EU fiscal policymaking: The role of better fiscal rules», VoxEU, 9 May