CHAPTER 5: A crisis management framework
for the EU |
194. The crisis in the euro area brought to light
a significant omission in the economic governance arrangements
of the EMU: the absence of a crisis management framework. This
deficiency has been exacerbated by the 'no bail-out' clause
of the TFEU. As the crisis unfolded, uncertainties as to whether
the EU was going to support countries experiencing financial difficulties
led markets to speculate about the resilience of the system, while
at the same time increasing the pressures on it.
195. Professor Pisani-Ferry explained that
the founders of the euro had assumed that only a regime to prevent
a crisis was needed. They felt that putting in place some sort
of crisis resolution mechanism "would have created a moral
hazard and therefore would have done more harm than good".
The euro area now finds itself dealing with the immediate crisis
without a mechanism for crisis management, while simultaneously
trying to put in place a framework for crisis management in the
196. This chapter reflects this perspective and
distinguishes between the measures put in place by the EU to mitigate
the ongoing crisis, and those to put in place a more permanent
system for the future.
The current crisis: towards 2013
197. To provide a bulwark against the market
speculation, the EU's leaders agreed in May 2010 to create two
temporary funds to provide liquidity to affected economies. The
European Financial Stabilisation Mechanism (EFSM) provided 60
billion underwritten by all 27 EU Member States; the larger European
Financial Stability Facility (EFSF), funded and available only
to the euro area, had funding of up to 440 billion. The
EFSM was under-written
by the EU budget and was established under Article 122.2 of the
Treaty on the Functioning of the European Union (TFEU), which
provides for temporary assistance to a Member State when it is
in "difficulties or is seriously threatened by natural disasters
or exceptional circumstances beyond its control". The EFSF,
in contrast, was created as a new entity, called a Special Purpose
Vehicle, with a limited life span of three years. In addition,
the IMF agreed to make available a credit line of up to 250
billion, making a total of 750 billion.
198. These decisions succeeded in easing tensions
somewhat, but there were continuing pressures on vulnerable Member
States. By late autumn 2010, Ireland had become the focus of attention
and was eventually obliged to accept a rescue package. The overall
package was of a similar order of magnitude to that offered to
Greece, and included funds from the EFSM and EFSF, and again an
IMF contribution. There were some key differences, however. First,
some 35 billion of the Irish facility was to be available
for direct support of Irish banks and, secondly, part of the funding
was in the form of direct bilateral loans from the UK (3.44
billion), and Sweden and Denmark (0.9 billion combined).
PRIVATE SECTOR INVOLVEMENT
199. During discussions on the establishment
of a permanent crisis mechanism (due to come into existence from
2013) to replace these two temporary mechanisms, public declarations
by politicians that the private sector would have to bear some
of the costs of the crisis spread unease among bondholders, leading
to an increase in the interest rates of sovereign bonds of peripheral
countries. We discussed the shortcomings of the euro area's communications
with the markets in Chapter 2.
200. Mr Leandro was clear that this was
a misunderstanding. He said that a statement made by the finance
ministers of France, Germany, Italy, Spain and the UK during the
G20 meeting in Seoul stated unequivocally that "private sector
involvement does not apply to outstanding debt
apply only under the new mechanism after 2013".
201. This assertion was commented on by several
witnesses. Professor Buiter's view was that this was "a
commitment they could not make".
He argued that "the only debt that's likely to be restructured
in the near futurethere will be sovereign debt restructuringis
the old debt".
Dr Annunziata also argued that it was "sidestepping
the problem" to say that only debt issued after 2013 would
be subject to haircuts,
adding that "the problem we are facing today is that a number
of European countries are saddled with substantial amounts of
202. While we recognise that some observers believe
that there will inevitably be haircuts for bond-holders on currently
issued sovereign debt, we heard evidence that this would lead
to further market unease and contagion.
Under these circumstances, we support the Government's position
that, to uphold market confidence, there must be no haircuts for
bond-holders in the short-term. This may be difficult to achieve,
and every effort should be made to ensure that those countries
currently financing large public debts with help from their EU
partners, including through the EFSM and EFSF, are able to continue
to do so until a new permanent mechanism can be brought in from
2013. The Irish
election campaign has shown that there will be pressures to ease
the burden on the two countries that have received rescue packages.
Difficult compromises may have to be reached between citizens
in these countries and bond-holders in others. The recent decision
to reduce the interest rate charged to Greece reflects the recognition
that Member States in trouble can only do so much. We welcome
the recent decision by euro area Member States to increase the
size of the lending capacity of the EFSF. Member States should
make clear that the EFSM and EFSF could be increased again, if
necessary, to ensure that any countries in difficulties will have
access to sufficient liquidity support.
203. The finance ministers of France, Germany,
Italy, Spain and the UK have stated that there will be no losses
for the private sector on sovereign debt issued before a new permanent
crisis mechanism comes into force in 2013. While we recognise
that this commitment may be necessary to maintain market confidence
in the euro area in the short-term, we are doubtful that it will
prove sustainable. It implies a significant burden upon citizens
in the debtor countries; a burden that they may find difficult
to maintain in the period to 2013 and beyond.
204. We welcome the recent decision by euro
area Member States to increase the size of the EFSF. We recommend
that Member States make clear that they will have no hesitation
in further increasing the size of the EFSF, if that is necessary,
to preserve the solvency of euro area Member States. In addition,
we recommend that Member States carefully consider the interest
rate on loans given by these two mechanisms to ensure that they
do not prove overly onerous on those countries receiving assistance.
ROLE OF THE EUROPEAN CENTRAL BANK
205. A key principle of the EMU is the independence
of the ECB. By separating national fiscal policy and the ECB,
the founders of the monetary union believed that monetary policy
was safe from being used by policy-makers as a lender of last
resort in times of strain on public finances. In the absence of
political independence, the central bank can be forced to print
money to finance government budget deficits.
206. While we did not consider the issue in much
detail, it became clear during our inquiry that the ECB played
a key role in the euro area's response to the sovereign debt crisis
through the purchase of Greek government debt
and that of other stricken euro area countries (the "Securities
Market Programme"). The ECB's intervention was intended to
prevent another banking crisis in the EU "where many banks
had unknown but potentially significant exposures to fiscally
According to Dr Schelkle, the ECB's bond purchase programme
showed "that the separation of fiscal and monetary policy
cannot always be maintained."
Whilst the ECB's programme helped stabilise the markets, it led
to strong criticism from different quarters, especially from the
out-going President of the Bundesbank Axel Weber
and German economists.
Dr Mayer and Dr Gros suggested that "a major casualty
of the emergency decisions was the ECB. With its move to prop
up the failing bonds of governments in financial distress, it
has allowed itself to be transformed into an agent of fiscal policy
... in the long run this is likely to undermine confidence in
the ECB and the euro." The ECB programme was described as
almost equivalent to quantitative easing by Professor Buiter
(see Box 10 below).
The ECB and quantitative easing
|Article 123 of TFEU forbids the ECB from giving credit to, or purchasing sovereign debt from, sovereigns. However, the Article does not forbid it from purchasing sovereign debt on the secondary markets. Under its newly-created "Securities Markets Programme" it can purchase any private and public securities in secondary markets. The ECB argued that this did not amount to quantitative easing (a policy where central banks create money to buy government debt and other assets to boost the money supply) and that it was acting on the basis of its mandate to preserve financial stability rather than deliberately supporting the liquidity of sovereigns in the euro area. Other observers have suggested that the ECB's "distinction between quantitative easing and asset purchases under the Securities Markets Programme is semantic, not substantive".
207. Witnesses elaborated on the risks of the
ECB's policies. Professor Louis suggested that although the
Securities Market Programme was legal, it was a policy "that
has necessarily to be temporary" because of its effect on
the ECB's balance sheet.
According to Professor Buiter the ECB have "at least
67 billion of wonky sovereign debt on their books outright
under the SMP [Securities Markets Programme], and they hold a
lot more sovereign debt from the peripheral countries as collateral
against bank loans, where the banks themselves are, in all likelihood,
insolvent in a number of cases".
208. Dr Mayer envisaged two alternatives
if these debts went bad: the ECB would have to be recapitalised,
or the bad debt would have to be paid off through creating money.
In the first case, Germany, as the largest shareholder, "would
have to foot the largest bill". The second alternative would
eventually cause inflation.
209. Barry Eichengreen, Professor of Economics
and Political Science at the University of California, Berkeley,
said in his article Drawing a line under Europe's crisis
that "the ECB, recent events remind us, is a lender and market-maker
of last resort and not just the steward of a monetary union
its legitimacy and credibility are at stake".
210. The ECB's purchase of sovereign bonds
has longer-term consequences for its reputation and balance sheet.
These should be carefully monitored and assessed. The ECB should
consider how to reduce its own exposure to heavily indebted banks
and sovereigns by shifting the funding burden to the new European
Stability Mechanism (see paragraphs 227-232).
EUROBONDS: THE WAY FORWARD?
211. The concept of a eurobond has been discussed
for a while in some circles in the EU, especially in the European
it was never considered seriously until the crisis. The original
proposal for a eurobond dates back to Jacques Delors in the 1980s,
and was recently revamped by Mario Monti in his report on the
Single Market to President Barroso.
The debate was given new life after Jean-Claude Juncker, the Luxembourg
Prime Minister and President of the Eurogroup, and Giulio Tremonti,
the Italian Finance Minister, authored an article in the Financial
Times putting forward their idea of how a eurobond might function.
212. They proposed that new sovereign debt from
euro area Member States could be issued in the form of eurobonds
through a new European Debt Agency. Up to 40% of the GDP of euro
area sovereign debt could ultimately be jointly and severally
guaranteed this way.
They argued that this expression of commitment to the euro would
increase the liquidity available to euro area members and end
speculative attacks against Member States. The German Chancellor,
Angela Merkel, however dismissed this idea on the basis that it
would impinge on fiscal sovereignty and would possibly require
a change in the Treaty to achieve.
213. Our witnesses were generally
sceptical about this Eurobond proposal, suggesting that it would
encourage moral hazard (Member States would have no incentive
to follow fiscally responsible policies since the eurobonds would
insulate them from the opinion of the markets) and would require
an increased level of fiscal integration. Dr Annunziata explained
that "a common Eurozone bond would need to be backed by a
common pool of resources, presumably a pooling of tax revenues
from the individual governments. This in itself would represent
some pooling of sovereignty that government would need to be ready
He suggested that the scheme would require the pooled revenues
to be set aside in a separate fund, otherwise all Member States
could find their borrowing costs rise if the markets felt some
individual Member States posed a high risk. The European Policy
Centre agreed and suggested that the challenge would be to make
certain that the cost of borrowing for the stronger countries
(e.g. Germany) did not rise disproportionately and that there
remained a "strong incentive for reform in the highly indebted
214. Professor Buiter felt that the proposal
by Juncker and Tremonti was unfeasible: "it's uncapped ...
and would remove any discipline of national sovereigns to keep
their fiscal-financial houses in order". He did suggest,
however, that it was already possible to issue "jointly and
severally guaranteed bondseurobonds if you wantunder
the existing Treaty, provided it is for a project". Since
the Treaty does not define what a project is, it might therefore
be possible to have "a capped amount of jointly and severally
215. Professor Pisani-Ferry explained another
proposed version of a eurobond, designed to mitigate the problem
of moral hazard.
Common bonds could only be issued up to a certain threshold of
GDP. This debt would be senior to the remaining public debt above
the threshold, which would remain the sole responsibility of the
individual Member States. This would ensure that the risk premiums
on the national debt would remain variable, and serve as an incentive
for states to maintain responsible a fiscal position.
216. The Minster told us that "no one has
yet come forward with a formal proposal around eurobonds",
and added that he believed any issue of a joint eurobond would
require a Treaty change to achieve.
217. Discussions over the feasibility or otherwise
of different proposals for eurobonds will continue. Although their
proponents suggest that they would help stabilise weaker members
of the euro area, there is little consensus on how they might
work at the present time. They may well represent a greater degree
of fiscal integration than Member States are willing to accept
given the current disparities between economies in the euro area.
Towards a permanent crisis resolution
218. A number of witnesses told us there was
a need for a permanent fund to provide liquidity assistance,
although Open Europe argued forcefully against the idea. It gave
two main reasons: that it would encourage moral hazard; and that
a permanent fund would make taxpayers in one country liable for
the mistakes of another.
Liquidity and solvency
|The linkage between solvency and liquidity became a recurrent theme during the course of our inquiry. The determination of whether a country is illiquid (a temporary inability to service debt) or insolvent (a long-term inability to service debt) is important to determine the effectiveness of a rescue mechanism. The fine line between illiquidity and insolvency for sovereign states is a question of judgement.
In practical terms, rescue funds such as the EFSM and EFSF facilities may help in case of illiquidity (since they will tide a fundamentally solvent government over a temporary period of difficulty), but will only postpone the problem for countries which are fundamentally insolvent. It has been argued, therefore, that to avoid a severe shock to a system when an insolvent government finally announces it cannot pay back its debts, there should be a debt restructuring mechanism put in place to deal with countries which are fundamentally insolvent.
219. Other witnesses argued for a debt restructuring
mechanism which would provide for an orderly restructuring of
an insolvent country's public debt (also described as a managed
default). At Germany's insistence
the issue was prominent in debates on a permanent crisis mechanism
during 2010. Ms Barysch explained why: "they [the Germans]
decided that if the discipline can't come from Brussels, it has
to come from the markets". The Germans therefore "wanted
... a restructuring clause ... so that we can ask the markets
to discipline countries if we can't do it ourselves".
220. Open Europe felt that an orderly default
procedure "would come with several benefits". They argued
that it would transfer risk from taxpayers to creditors; reduce
moral hazard; and ensure that the markets priced risk correctly
by sending a clear message that no euro area country was "too
big to fail".
Dr Dabrowski took a similar view, noting that "clearly
defined rules and procedures of sovereign default ... could help
minimise market panics in case of fiscal difficulties in individual
countries and would force financial markets to better price ...
risks in advance".
The Institute for Economic Affairs stated that if market forces
were to control governments' behaviour effectively, "reforms
ought to be aimed at making a sovereign default look as inevitable
an outcome of fiscal irresponsibility as it would in the absence
of a monetary union",
while Professor Buiter stated such a mechanism was necessary
"to deal with those sovereigns that are fiscally unsustainable
and insolvent and who, in the absence of fiscal union, need to
221. The Minister raised a note of caution, saying
that if sovereign debt were issued with collective action clauses,
it was likely to raise the cost of borrowing, particularly if
investors were uncertain about the underlying economic health
of the Member States concerned. For some Member States, there
is a clear risk that the premium would soar and could push them
towards a default on existing debt.
222. In addition to these points, we would suggest
that a debt restructuring mechanism would offer a way forward
to countries finding their debt burden an insurmountable obstacle
to future growth.
A DUAL MECHANISM
223. A number of witnesses supported the establishment
of a mechanism providing both liquidity assistance and debt restructuring.
Dr Mayer summarised what he thought its basic functions should
be: "to give, in times of emergency and financial distress,
emergency financial assistance coupled to adjustment programmes.
The second function would be to make a default of a sovereign
possible without this causing a systemic shock".
224. Dr Mayer, with Dr Gros, has previously
proposed a 'European Monetary Fund' which he described as 'a European
IMF-plus". This mechanism would offer financing, under strict
conditionality in the same way as the IMF, but in addition would
have "the ability to restructure the debt of an insolvent
Dr Gros described the advantage of having such an institution:
"you need an independent institution ... to take the difficult
decisions on whether a sovereign is liquid or insolvent ... The
Commission itself is not the proper place, because as a college
it is becoming more and more political ... just making ECOFIN
partially independent is not enough".
Dr Gros and Dr Mayer envisaged financing such an institution
through contributions from euro area Member States, in proportion
to the risk each country presents. Countries breaching the SGP
would therefore pay higher contributions.
225. Dr Schelkle was supportive of the notion
of an independent body: "we need a kind of equivalent of
a European Monetary Fund".
Dr Annunziata, although he agreed that a permanent fund would
be helpful in reducing the risk of systemic instability, questioned
why the IMF was not suitable: "it would seem most wasteful
to duplicate the features and expertise of the IMF by setting
up a European Monetary Fund".
If this did happen though, he felt strongly that the expertise
of the IMF should be involved: "The IMF, in terms of the
design of the adjustment policies, needs to go hand in hand with
any external financing and debt restructuring mechanism".
226. The Government have been reluctant to comment
on the possible structure of a permanent crisis resolution mechanism.
The Minister made clear that the Government "accept the need
for a permanent mechanism", but was not willing to comment
in substantial detail since it had been decided that the UK "should
be outside it" (see below, paragraphs 235-243).
THE CURRENT PROPOSAL
227. After EU Member States were forced to provide
financial assistance to Greece, and to set up temporary liquidity
facilities in the shape of the EFSM and EFSF, the idea of a permanent
crisis resolution mechanism (PCRM) started to take shape.
228. The Commission legislative package on economic
governance does not include a proposal for a permanent crisis
resolution mechanism. Mr Costello explained that, since the
EFSM and EFSF would be operational and providing financial support
until 2013, the Commission initially decided to concentrate on
the "ambitious package" to reform EU economic governance.
229. The issue was, however, considered by the
van Rompuy taskforce report and the European Council decided in
October 2010 to "bring forward that debate".
In December 2010 the EU Heads of State reached an agreement on
a permanent resolution mechanismthe European Stability
Mechanism (ESM). This will replace the EFSF and the EFSM when
they expire in 2013. The new ESM will be founded on an inter-governmental
basis, and will only be funded by, and available to, members of
the euro area. There will be provisions made so that other Member
States within the EU can contribute to financial assistance packages
on an ad hoc, bilateral basis.
230. The mechanism will be activated "if
indispensable to safeguard the stability of the euro area as a
whole". The ESM will provide financial assistance to euro
area Member States under strict conditionality, meaning that loans
will only be provided if the Member States agree to take certain
actions to improve their financial situation. These conditions
would be decided on a case by case basis. In addition, from 2013
onwards all euro area government bonds will be issued with collective
action clauses that will allow a qualified majority of bondholders
to agree on legally binding changes to the terms of payment in
the event that the debtor is unable to pay. There are, however,
key issues that are still to be defined, such as the size of the
mechanism, the terms under which the private sector would be involved,
and the governance arrangements.
231. The European Council have proposed an amendment
to the Treaties
to establish the ESM. We consider in more detail the practical
and legal steps that will be taken to achieve this in our report
Amending Article 136 of the Treaty of the Functioning of the
232. On balance, the evidence we received was
strongly in favour of the establishment of permanent crisis mechanism
incorporating both a financial assistance fund and a mechanism
for an orderly sovereign default. We welcome, therefore, the
Council's proposals for a European Stability Mechanism. The existence
of a formal way of restructuring sovereign debt will encourage
the market to price better the risks posed by individual Member
States within the euro area, and encourage more responsible fiscal
behaviour by Member States which will no longer be insulated from
market forces by their membership of the euro. Conditionality
is a vital element and we support its application. The ECB should
be consulted on the terms and conditions of loans under the ESM.
233. Despite differing views on whether outstanding
sovereign debt would have to be subject to haircuts, our witnesses
were strongly of the opinion that the private sector had to share
the burden under a permanent crisis mechanism. Dr Mayer told
us that taxpayers would not accept that "lenders, who in
the past have benefited from elevated returns by lending money
to the country, would be entirely spared".
Dr Annunziata agreed and felt that "some form of private
sector participation in the pain of haircuts is necessary and
234. We welcome the principle, enshrined in
the ESM agreement, that the private sector should share the burden
of any restructuring of sovereign debt under the new ESM mechanism.
It is only right that as they share in the rewards, they should
share the risks.
Should the UK participate?
235. As noted above, the ESM will be created
and financed by the euro area. Non-euro area countries would be
able to decide to participate voluntarily in financial assistance
packages if they wish. The UK could thus choose to participate
on an ad hoc basis.
236. The UK's involvement in the crisis resolution
measures adopted by the EU up to 2011 is significant, though limited
by non-membership of the euro. The UK participated in the EFSM
(since it was secured by the EU budget), and through its contributions
to the IMF was part of the rescue packages to Ireland and Greece.
It also contributed separately to the Ireland rescue package through
a bilateral loan. It did not, however, participate in the EFSF
and the Government have made clear that the UK will not be participating
in the ESM. Both
these vehicles are limited to the euro area.
237. We sought views on whether the UK should
try to participate voluntarily in a permanent crisis mechanism.
Mr Cliffe felt that it was "a political question":
should the UK and other non-members "play their part in the
interests of the broader stability of the European Union".
238. Witnesses drew our attention to the UK's
interests in euro area countries such as Spain and Portugal. Dr Dadush
pointed out that "a credit event in Spain and Italy would
have devastating implications for the UK," and wondered "why
the UK would be a participant in the IMF, to rescue, say, Thailand,
but should stand back if Spain is in trouble".
The European Movement UK made the same argument, adding if the
UK was outside any permanent mechanism it could not call upon
it if needed.
The European Policy Centre commented if the UK did not pull its
"economic weight" and help weaker Member States in economic
difficulties, "future problems in the UK have to be faced
other argument we heard was that if it did not take part "the
UK's influence on the design and of the mechanism and on associated
policy issues" would be "very limited".
239. Dr Annunziata thought that although
there were strategic issues about the best way for the UK to influence
the process, "this is a Eurozone problem ... there is no
automatic argument as to why they should be extended to EU members
that do not belong to the Eurozone".
Professor Chadha was blunt: "there is no need for the
UK, as a non-member of the Eurozone, to be involved in any Eurozone
The Institute for Economic Affairs disputed the premise that the
UK had to be a part of the mechanism to influence the debate:
"Britain's influence, in or out of the Eurozone, is a direct
function of our economic strength or weakness".
240. We asked the Minister why the UK was not
taking part. He replied, "it is there to underpin the stability
of the Eurozone, it is purely a matter for the Eurozone".
He clarified the UK's role and influence: "we should be outside
it. We can give advice or commentsif that is welcomeon
how it should be designed, but it is a matter for the Eurozone
to lead on".
241. This view was echoed by the Minister for
Europe to whom we spoke after the December European Council took
place. He stressed that "the [ESM] is a mechanism of the
Eurozone, by the Eurozone, for the Eurozone".
When pressed on whether the UK should have shown more solidarity
towards the euro area, in light of UK banks' exposure to EU debt,
he responded that the UK had already shown its solidarity by agreeing
to a treaty change, providing bilateral support to Ireland and
contributing to other Member States receiving assistance through
242. The ESM will be compulsory only for members
of the euro area. However, we recognise that it might be in the
UK's interests to contribute to rescue packages for Member States
in difficulties, as happened with Ireland. In this light, we welcome
the recent European Council proposals which will allow Member
States outside the euro area to contribute on a bilateral basis
when they consider it is in their national interests.
243. We recognise the expertise of the IMF
in this area. The IMF has been involved in the rescue packages
provided to Greece and Ireland; we recommend that it should be
involved in any future rescue package provided by the European
257 Article 125 prohibits the Union from being liable
for the financial commitments of governments. It means that there
should be no scope for a Member State to borrow directly from
any EU body, including the ECB which is also specifically precluded
from directly purchasing government securities (Article 123).
In this way the monetisation of debt (printing money) is ruled
out, a provision designed to prevent inflationary pressures. Back
Q 272 Back
Q 396 Back
Established by Council Regulation 407/2010 Back
See paragraphs 61-63 Back
Q 261 Back
Q 495 Back
Q 496 Back
A haircut occurs when a lender has to accept a reduction in the
redemption value of a bond because of the inability of the borrower
to pay it in full; for example, if only 90 cents is repaid per
euro, the haircut would be ten cents (10%). Back
Q 134 Back
QQ 101 (Professor Goodhart), 135 (Dr Annunziata), 178 (Dr Gros) Back
See paragraphs 227-234 for more information on the new permanent
The independence of the ECB and the national central banks of
the Eurosystem has a constitutional status, as it has been set
down in both the Treaty on the Functioning of the European Union
(Article 282.3) and the Statute of the European System of Central
Banks rather than in secondary legislation. Back
ECB Press Release, ECB decides on measures to address severe
tensions in financial markets (10 May 2010) Back
Buiter W and Rahbari E, "Greece and the fiscal crisis in
the Eurozone", Centre for Economic Policy Research Policy
Insight No.51 (2010) Back
EGE 3 Back
Bloomberg, Thesing G and Buergin R, Weber Says ECB Should Phase
Out Bond Purchases Now (13 October 2010) Back
Bloomberg, Gros D and Mayer T, ECB May Kiss Credibility Goodbye,
(May 11 2010) Back
Q 488 Back
Buiter and Rahbari, "Greece and the fiscal crisis in the
Eurozone", op. cit. Back
Q 367 Back
Q 492. See also Q 53 (Mr Cliffe) Back
Mayer T "What more do European governments need to do to
save the Eurozone in the medium run?", VoxEU.org (17
June 2010) Back
Eichengreen B, "Drawing a line under Europe's crisis",
Remarks at the Ninth annual Munich Economic Summit (17
June 2010) Back
Q 483 Back
Monti, A new strategy for the Single Market, op. cit. Back
Juncker C and Tremonti G, "E-bonds would end the crisis",
Financial Times (5 December 2010) Back
Q 497 Back
Although not unanimously-see for example EGE 3 (Dr Schelkle) Back
EGE 16 Back
EGE 22 Back
Q 496 Back
Delpa J and von Weizsäcker J, "The blue bond proposal",
Bruegel Policy Brief 2010/03 (2010) Back
Q 570 Back
Q 572 Back
QQ 65-66 (Mr Cliffe), 100 (Professor Goodhart), 172 (Dr Gros),
290 (Professor Pisani-Ferry), 489 (Professor Buiter), EGE 3 (Dr
EGE 7 Back
See Czuczka T, "Merkel's coalition steps up calls for orderly
insolvencies in euro zone", Bloomberg (4 May 2010) Back
Q 453 Back
EGE 7 Back
EGE 10 Back
EGE 8 Back
Q 489 Back
Collective action clauses are provisions that allow a qualified
majority of bondholders to change the terms of payment. They can
facilitate creditor-debtor negotiations in cases where sovereign
debt restructuring is necessary. Back
See, for example, QQ 290 (Professor Pisani-Ferry), 489 (Professor
Q 131 Back
Q 140 Back
Q 172 Back
Q 113 Back
EGE 9 Back
Q 141 Back
Q 509 Back
Q 261 Back
Q 261 Back
The EU is founded on two core Treaties: the Treaty on European
Union and the Treaty on the Functioning of the European Union. Back
European Union Committee, 10th Report (2010-11): Amending Article
136 of the Treaty on the Functioning of the European Union
(HL Paper 110). Back
Q 133 Back
Q 134. See also, for example, Q 155 (Sir Martin Jacomb) Back
Q 508 Back
Q 67 Back
EGE 18 Back
EGE 22 Back
EGE 22 Back
EGE 22 Back
Q 141 Back
EGE 5 Back
EGE 8 Back
Q 558 Back
Q 558 Back
Q 9 Back
Q 1 Back