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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
A few weeks ago Reuters reported that the French finance Minister, Pierre Moscovici, fell asleep during the final late night negotiations over the Cypriot bank bailout on March 24. It apparently fell to the International Monetary Fund (IMF) managing director, Christine Lagarde—a former French finance minister herself—to wake him up. No doubt the grueling round-the-clock [...]
Installation of a new government in Italy and the first effects of the newly approved bailout in Cyprus provide some modestly optimistic data points for an otherwise weak euro area outlook. For Italy, a Fresh Start, a Youthful Team, but No Guarantees of Success In Italy, Enrico Letta has taken office as the prime minister, [...]
The European Central Bank’s first Household Finance and Consumption Survey (HFCS) for the euro area generated an unusual amount of attention and outrage earlier this month. Some controversy surrounded the timing of the release, which came after the German Bundesbank published part of the data in late March, at the time of the final negotiations [...]
European short-term economic growth prospects remain weak because of rampant fiscal consolidation, private sector deleveraging, and the temporary unsettling effects of structural reforms. But European leaders continue to take important and constructive decisions on bailouts and the banking union, suggesting that recovery will eventually get on track. At least three such decisions occurred at the [...]
My RealTime posting on March 25 about the potential precedent set by the Cyprus bailout deal provoked much commentary focusing on the impact in the euro banking system. Let me elaborate. The precedent of imposing losses on uninsured depositors in Laiki Bank and the Bank of Cyprus was a sound one, but that does not [...]
After a week of threats, protests, and alarm in financial markets, Cyprus and its bailout partners reached a deal early Monday morning that was far better than the outcome negotiated earlier in the month. Instead of socializing the costs of their failure across the entire Cypriot population, [pdf] Cyprus and the Troika (consisting of the [...]
The decision in Europe to tax depositors in Cypriot banks, forcing them to share in the cost of the latest euro area bailout, has sparked anger in Cyprus and concern that a run on Cypriot banks could spread to Spain, Italy, and other troubled countries. But the so-called “stability levy” on all depositors, not even [...]
The recent election and political confusion in Italy indicate that political risk is back in Europe. Yet what is the real scope of the danger, and where do we go from here? To answer, it is worth noting that there were two elections in Europe, one in Cyprus and one in Italy, and in many [...]
In the first round of the presidential election in Cyprus on February 17, Nicos Anastasiades, the center right presidential candidate, won 45.5 percent of the vote, setting up a final round against Stavros Malas from the communist AKEL party of the incumbent president, Demetris Christofias. Malas garnered 27 percent of the vote. The new frontrunner [...]
The Irish deal with the European Central Bank (ECB) and other European central banks to relieve the huge Irish debt burden resulting from the bank bailout four years ago has arrived even faster than predicted here. This is good news. The Irish government can now avoid the €3.1 billion promissory note payment due at the [...]