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Policy Contribution

The long haul: managing exit from financial assistance

Countries can make a clean exit from financial assistance, or enter a new programme or a precautionary programme, depending on the sustainability of their public debt and their vulnerability to shocks.

By: , and Date: February 20, 2014 Topic: European Macroeconomics & Governance

Ireland made a clean exit in December 2013, supported by significant budgetary and current-account adjustment and signs of economic recovery. But Irish debt sustainability is not guaranteed and prudence will be needed to avoid future difficulties.

A clean exit for Portugal is not recommended when its programme ends in May 2014, because compared to Ireland it faces higher interest rates, has poorer growth prospects and has probably less ability to generate a consistently high primary surplus. A precautionary arrangement would be advisable. In case debt sustainability proves dif- ficult to achieve later, some form of debt restructuring may prove necessary.

It is unlikely that Greece will be able to exit its programme in December 2014. A third programme should be put in place to take Greece out of the market until 2030, accompanied by enhanced budgetary and structural reform commitments by Greece, a European boost to economic growth in the euro-area periphery and willingness on the part of lenders to reduce loan charges below their borrowing costs, should public debt levels prove unsustainable despite Greece meeting the loan conditions.

Even assuming all goes well, the three countries will be subject to enhanced post-pro- gramme surveillance for decades. Managing such long-term relationships will be a key challenge.

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Opinion

Can households in the European Union make ends meet?

Half the households surveyed by Eurostat see themselves as unable to find the resources they would need to cope with an unexpected expense within a month, estimated by experts at €375 in the case of Greece.

By: Maria Demertzis, Marta Domínguez-Jiménez, Annamaria Lusardi and Bruegel Topic: Finance & Financial Regulation Date: July 24, 2020
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Policy Contribution

The financial fragility of European households in the time of COVID-19

The concept of household financial fragility emerged in the United States after the 2007-2008 financial crisis. It grew out of the need to understand whether households’ lack of capacity to face shocks could itself become a source of financial instability.

By: Maria Demertzis, Marta Domínguez-Jiménez, Annamaria Lusardi and Bruegel Topic: European Macroeconomics & Governance Date: July 2, 2020
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Podcast

Podcast

Backstage at BAM19: How much further reform is needed for the new financial sector?

Backstage at the Bruegel Annual Meetings, Rebecca Christie talks with Nicolas Véron on the new financial sector.

By: The Sound of Economics and Bruegel Topic: Finance & Financial Regulation Date: September 5, 2019
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Blog Post

The Turkish Crisis

Financial markets have been very nervous about Turkey for the past few weeks. We review economists’ opinions about the economic, political and geopolitical risks and opportunities of this situation.

By: Silvia Merler and Bruegel Topic: Global Economics & Governance Date: August 27, 2018
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Blog Post

Enhancing the ESM lending toolkit through a precautionary credit line

Strengthening the ESM can help to prevent crises and enhance deeper financial integration in the euro area. Yet, mislabelling the ESM as “European Monetary Fund” will not do the trick. Instead, a revamp of its precautionary credit line could create a meaningful instrument, built on the existing policy framework, by incentivising strong economic policies and guarding against financial market turbulence. However, the devil is in the details. The design of such a facility has to be well thought through, to navigate difficult trade-offs.

By: Jochen Andritzky and Bruegel Topic: Finance & Financial Regulation Date: June 11, 2018
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Past Event

Past Event

Lessons for the future governance of financial assistance in the EU

On 14th June, Randall Henning will present his latest book on the Euro crisis and we will discuss how financial assistance should be governed in the euro area in the future.

Speakers: Servaas Deroose, C. Randall Henning, Rolf Strauch, Guntram B. Wolff and Bruegel Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 14, 2017
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Working Paper

Regional and global financial safety nets: the recent European experience and its implications for regional cooperation in Asia

Comparing and evaluating financial assistance programmes of four euro-area countries (Greece, Ireland, Portugal, and Cyprus) and three non-euro-area countries (Hungary, Latvia, and Romania) of the European Union in the aftermath of the 2007/08 global financial and economic crisis. Asian countries can draw several lessons from European experiences.

By: Zsolt Darvas Topic: European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance Date: April 20, 2017
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Past Event

Past Event

Cyprus: Financing the Recovery

As Cyprus looks ahead to post-bailout growth, what lessons have been learnt from the crisis and subsequent bank restructuring?

Speakers: Sofronis Clerides, Harris Georgiades, David Green, Vincenzo Guzzo, Libor Krkoska, Michael S. Michael, Dirk Schoenmaker and Nicolas Véron Topic: European Macroeconomics & Governance Location: University of Cyprus, 1 University Avenue, Aglantzia Date: October 26, 2015
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Blog Post

Greece budget update

Primary surplus picked up in June, but July is the key month to watch.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: July 16, 2015
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Blog Post

Five Lessons on Greece

A reflection on the experience of Greece and other countries who have implemented rescue programs

By: Marek Dabrowski Topic: European Macroeconomics & Governance Date: July 16, 2015
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Blog Post

Preserving the Greek financial sector: options for recap and assistance

Regaining the stability of the Greek financial sector is key, as a meltdown could lead to Grexit. The stability of the Greek financial system currently relies on the provision of ECB liquidity, which in turn is only available to solvent banks.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: July 12, 2015
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Video

Video

The troika and financial assistance in the euro area

Bruegel launches a new video format to provide our audience with timely analysis anchored to some of the most topical economic news. In the first video of this series, Bruegel scholars evaluate the Troika’s financial assistance programmes in the eurozone. Director Guntram Wolff and Senior Fellows André Sapir and Zsolt Darvas answer how and when […]

By: Guntram B. Wolff, André Sapir and Zsolt Darvas Topic: European Macroeconomics & Governance Date: February 21, 2014
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