Coping with the fragmentation of the euro area banking system and the real crisis

Xavier Timbeau (1) , Lars Anderson , Christophe Blot , Jérôme Creel (1) , Andrew Watt

1 OFCE - Observatoire français des conjonctures économiques (Sciences Po)

The financial turmoil resulting from the subprime crisis and then the European sovereign debt crisis have weakened the euro zone’s banks and the state of public finances, creating a vicious circle in which the banking and debt crises have been mutually reinforcing (Shambaugh, 2012). This was followed by an unprecedented loss of confidence that caused a double liquidity crisis: first in September 2008, following the fall of Lehman Brothers, and then at the end of 2011 due to the European debt crisis. Despite the many common rules applied by the Member States on financial regulation and a common framework for competition and freedom of establishment, the banking and financial system, which seemed to be increasingly integrated2, has fragmented. [First paragraph]

Keywords: Fragmentation; Euro area banking system; Crisis

Domains: Humanities and Social Sciences; Economics and Finance

Xavier Timbeau, Lars Anderson, Christophe Blot, Jérôme Creel, Andrew Watt. Coping with the fragmentation of the euro area banking system and the real crisis: The impossible challenge of the ECB alone. Revue de l'OFCE, 2005, IAGS, pp.97 - 129. ⟨hal-03458900⟩