Keywords
PIIGS crisis
Financial instability
Euro
Eurosystem
Minskian approach.
Financial instability
Euro
Eurosystem
Minskian approach.
How to Cite
OLIVEIRA, Giuliano Contento de; BLIKSTAD , Nicholas Magnus Deleuse. Financial instability in the Eurozone and the crisis of the GIIPS government bonds. Economia e Sociedade, Campinas, SP, v. 27, n. 2, p. 431–462, 2019. Disponível em: https://periodicos.sbu.unicamp.br/ojs/index.php/ecos/article/view/8656773. Acesso em: 17 jul. 2024.
Abstract
The financial instability in the Eurozone, triggered in September 2008, and its intensification as a result of the GIIPS (Greece, Ireland, Italy, Portugal, and Spain) sovereign bonds crisis since 2010, shows the disruptive capacity of the combination of deregulated and liberalized finances and the rigid institutional framework of the Euro. Although this institutionality enabled the growth of the Eurozone’s peripheral economies before the crisis, the rigidities imposed by it on national economic policies became clear when the expectations changed. In this sense, this paper discusses the Eurozone’s financial instability, especially the sovereign bond crisis of GIIPS, in light of the Minskyan approach. The paper describes the principal features of the fragility of GIIPS financial structure, as well as the Eurozone financial system’s behavior and the Eurosystem’s role in dealing with the crisis. It is argued that is possible to understand the GIIPS financial crisis using the Minskyan approach and that the rigidities of the European Monetary Union institutionality, especially with regard to the loss of monetary sovereignty of the national economies, increased the financial fragility of the GIIPS.
References
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KEYNES, J. M. A teoria ex ante da taxa de juros. In: IPEA. Clássicos da literatura econômica. Rio de Janeiro: Ipea, 1992. p. 335-341, 1937.
KREGEL, J. Margins of safety and weight of the argument in generating financial fragility. Journal of Economic Issues, v. XXXI, n. 2, 1997.
LAVOIE, M. (2002) A post-Keynesian alternative to the New consensus on monetary policy. ADEK Conference, Université de Bourgogne, Dijon, France.
LAVOIE, M. Post-Keynesian economics: new foundations. Edward Elgar Publishing Limited, 2014.
LAVOIE, M. The Eurozone crisis: a balance-of-payments problem or a crisis due to a flawed monetary design? International Journal of Political Economy, v. 44, n. 2, p. 157-160, 3 abr. 2015.
LAVOIE, M. The monetary and fiscal nexus of neo-chartalism: a friendly critique. Journal of Economic Issues, v. 47, n. 1, p. 1-32, 2013.
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MINSKY, H. P. Can it happen again? Armonk, New York: M. E. Sharpe, Inc., 1982.
MINSKY, H. P. John Maynard Keynes. New York: Columbia University Press, 1975.
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OLIVEIRA, Giuliano C. de; WOLF, Paulo J. W.; PALLUDETO, Alex W. Os limites da recuperação econômica da zona do Euro (2008-2016). Brazilian Keynesian Review, v. 2, n. 1, p. 125-131, 2016.
PRATES, D. M. Crises financeiras nos países “emergentes”: uma interpretação heterodoxa. Tese (Doutorado)–Instituto de Economia. Universidade Estadual de Campinas, Campinas, 2002.
PRATES, D. M.; FARHI, M. The shadow banking system and the new phase of the money manager capitalism. Journal of Post Keynesian Economics, v. 37, n. 4, p. 568- 589, 2015.
PRIEWE, J. European imbalances and the crisis of the European Monetary Union. In: HERR, Hansjörg; NIECHOJ, Torsten; THOMASBERGER, Claus; TRUGER, Achim; VAN TREECK, Till (Ed.). From crisis to growth? The challenge of debt and imbalances. Metropolis: Marburg, 2012.
RIXTEL, A.; GASPERINI, G. Financial crises and bank funding: recent experience in the euro area. BIS Working Paper, n. 406, 2013.
SCHELLER, H. O Banco Central Europeu: história, papel e funções. Banco Central Europeu, Eurosistema, 2006.
SHIN, H. S. Financial intermediation and the post-crisis financial system. BIS Working Papers, n. 304, 2010.
SNOWDON, B.; VANE, R. Modern macroeconomics: its origin, development and current state. Massachusetts, USA: Edward Elgar Publishing. 2005.
TAVLAS, G. The ‘new’ theory of optimum currency areas. The World Economy, 1993.
TOPOROWSKI, J. International credit, financial integration and the euro. Cambridge Journal of Economics, n. 37, 2013.
VILLAR-BURKE, J. The bonsai and the gardener: using flow data to better assess financial sector, European Economy, Economic Papers (500). Brussels, European Commission, 2013.
ALLEN, W.; MOESSNER, R. The liquidity consequences of the euro area sovereign debt crisis. BIS Working Papers, n. 390, 2012.
ARESTIS, P. What is the new consensus in macroeconomics? In: ARESTIS, P. Is there a new consensus in macroeconomics? New York: Palgrave Macmillan, 2007.
ARESTIS, P.; SAWYER, M. The design faults of the economic and monetary union. Journal of Contemporary Economic Studies, v. 19, n. 1, p. 21-32, Mar. 2011.
BELLUZZO, L. G. Prefácio. In: CINTRA, M. A. M.; MARTINS, A. As transformações no sistema monetário internacional. Brasília: Ipea, 2013.
BELLUZZO, L.; COUTINHO, L. “Financeirização” da riqueza, inflação de ativos e decisões de gasto em economias abertas. Economia e Sociedade, Campinas, v. 7, n. 2, p. 137-150, 1998.
BORIO, C. Monetary policy and financial stability: what role in prevention and recovery? BIS Working Papers, n. 440, 2014.
BORIO, C.; DISYATAT, P. Global imbalances and the financial crisis: link or no link? BIS Working Papers, n. 346, 2011.
BRESSER-PEREIRA, L. C.; ROSSI, P. Sovereignty, the exchange rate, collective deceit, and the euro crisis. Journal of Post Keynesian Economics, v. 38, p. 355-375, 2015.
BIBOW, J. The Euro debt crisis and Germany’s Euro trilemma. Levy Institute, 2012. (Working Paper, n. 721).
CESARATTO, S. The implications of TARGET2 in the European balance of payments crisis and beyond. European Journal of Economics and Economic Policies: Intervention, v. 10, n. 3, p. 359–382, 1 Dec. 2013.
CINTRA, M. A. M.; FARHI, M. A crise financeira e o global shadow banking system. Novos Estudos Cebrap, São Paulo, n. 82, p. 35-55, nov. 2008.
CGFS – COMMITTEE ON THE GLOBAL FINANCIAL SYSTEM. The impact of sovereign credit risk on bank funding conditions. CGFS Papers, n. 43, 2011.
COUNCIL OF THE EUROPEAN UNION. Council approves aid to Portugal, sets out conditions. PRESSE 132. Brussels, May 2011.
COUNCIL OF THE EUROPEAN UNION. Council implementing decision on granting Union financial assistance to Ireland. Interinstitutional File: 2010/0351 (NLE). Brussels, 7 Dec. 2010.
DE GRAUWE, P. They European Central Bank: Lender of Last Resort in the Government Bond Markets? CEFifo Working Papers, n. 3569, 2011.
DINIZ, André S.; JAYME JR., Frederico G. Competitividade e restrição externa na zona do Euro. Revista de Economia Política, São Paulo, v. 33, n. 1, p. 17-40, jan./mar.2013.
DRAGHI, M. Speech at the Global Investment Conference in London. European Central Bank, 2012.
EEAG – European Economic Advisory Group. A new crisis mechanism for the euro area. The EEAG report on the European Economy. Munich: CESifo, 2011.
EICHENGREEN, B. A globalização do capital. São Paulo: Editora 34, 2000.
EICHENGREEN, B. The European Economy Since 1945: coordinated capitalism and beyond. Princeton University Press, 2007.
EUROBANK RESEARCH. Eurogroup endorses second bailout package for Greece: key parameters and conditionality. Greece Macto Monitor, Feb. 21, 2012.
EUROPEAN COMMISSION. A Roadmap towards a Banking Union. Brussels, 2012.
EUROPEAN COMMISSION. European Stability Mechanism. Brussels, 2010.
EUROPEAN COMMISSION. Proposal for a single resolution mechanism for the banking union. COM(2013) 520 final, Brussels, 2013.
EUROPEAN CENTRAL BANK. ELA procedures. Oct. 17, 2013.
EUROPEAN COUNCIL. General Secretariat of the Council: Conclusions. Brussels, Apr. 20, 2011.
FARHI, Maryse. Revelações da crise: moeda fiduciária e as relações Tesouro-Banco Central. Revista de Economia Política, São Paulo, v. 34, n. 3, p. 396-412, jul./set. 2014.
FISHER, Irving. The debt-deflation theory of great depressions. Econometrica, v. 1, n. 4, p. 337-357, Oct. 1933.
FLASSBECK, H.; LAPAVITSAS, C. The systemic crisis of the euro – true causes and effective therapies. Rosa Luxemburg Stiftung, 2013.
FREITAS. M. A crise da Zona do Euro. Boletim de Economia 10, Fundap, 2011.
GOODFRIEND, M; KING. R. The new neoclassical synthesis and the role of monetary policy. NBER Macroeconomics Annual, v. 12, 1997.
GOODHART, C. The two concepts of money: implications for the analysis of optimal currency areas. European Journal of Political Economy, v. 14, p. 407-432, 1998.
GROS, D.; SCHOENMAKER, D. European Deposit Insurance and Resolution in the Banking Union. Journal of Common Market Studies, 2014.
HEIN, E. Finance-dominated capitalism, re-distribution and the financial and economic crises – a European perspective. Munich Personal RePEc Archive, 2012.
ISSING, O.; ANGELONI, I.; GASPAR, V.; TRISTANI, O. Monetary policy in the Euro area: strategy and decision making at the European Central Bank. Cambridge University Press, 2004.
KEYNES, J. M. A teoria ex ante da taxa de juros. In: IPEA. Clássicos da literatura econômica. Rio de Janeiro: Ipea, 1992. p. 335-341, 1937.
KREGEL, J. Margins of safety and weight of the argument in generating financial fragility. Journal of Economic Issues, v. XXXI, n. 2, 1997.
LAVOIE, M. (2002) A post-Keynesian alternative to the New consensus on monetary policy. ADEK Conference, Université de Bourgogne, Dijon, France.
LAVOIE, M. Post-Keynesian economics: new foundations. Edward Elgar Publishing Limited, 2014.
LAVOIE, M. The Eurozone crisis: a balance-of-payments problem or a crisis due to a flawed monetary design? International Journal of Political Economy, v. 44, n. 2, p. 157-160, 3 abr. 2015.
LAVOIE, M. The monetary and fiscal nexus of neo-chartalism: a friendly critique. Journal of Economic Issues, v. 47, n. 1, p. 1-32, 2013.
MINSKY, H. P. Stabilizing an unstable economy. New Haven: Yale University Press, 1986.
MINSKY, H. P. Can it happen again? Armonk, New York: M. E. Sharpe, Inc., 1982.
MINSKY, H. P. John Maynard Keynes. New York: Columbia University Press, 1975.
OLIVEIRA, G.; DEOS, S.; WOLF, P. A crise europeia e os limites do ajuste deflacionário. In: MODENESI, A.; PRATES, D.; OREIRO, J.; PAULA, L.; RESENDE, M. Sistema financeiro e política econômica em uma era de instabilidade: tendências mundiais e perspectivas para a economia brasileira. Associação Keynesiana Brasileira. Editora Campus, 2012.
OLIVEIRA, Giuliano C. de; WOLF, Paulo J. W.; PALLUDETO, Alex W. Os limites da recuperação econômica da zona do Euro (2008-2016). Brazilian Keynesian Review, v. 2, n. 1, p. 125-131, 2016.
PRATES, D. M. Crises financeiras nos países “emergentes”: uma interpretação heterodoxa. Tese (Doutorado)–Instituto de Economia. Universidade Estadual de Campinas, Campinas, 2002.
PRATES, D. M.; FARHI, M. The shadow banking system and the new phase of the money manager capitalism. Journal of Post Keynesian Economics, v. 37, n. 4, p. 568- 589, 2015.
PRIEWE, J. European imbalances and the crisis of the European Monetary Union. In: HERR, Hansjörg; NIECHOJ, Torsten; THOMASBERGER, Claus; TRUGER, Achim; VAN TREECK, Till (Ed.). From crisis to growth? The challenge of debt and imbalances. Metropolis: Marburg, 2012.
RIXTEL, A.; GASPERINI, G. Financial crises and bank funding: recent experience in the euro area. BIS Working Paper, n. 406, 2013.
SCHELLER, H. O Banco Central Europeu: história, papel e funções. Banco Central Europeu, Eurosistema, 2006.
SHIN, H. S. Financial intermediation and the post-crisis financial system. BIS Working Papers, n. 304, 2010.
SNOWDON, B.; VANE, R. Modern macroeconomics: its origin, development and current state. Massachusetts, USA: Edward Elgar Publishing. 2005.
TAVLAS, G. The ‘new’ theory of optimum currency areas. The World Economy, 1993.
TOPOROWSKI, J. International credit, financial integration and the euro. Cambridge Journal of Economics, n. 37, 2013.
VILLAR-BURKE, J. The bonsai and the gardener: using flow data to better assess financial sector, European Economy, Economic Papers (500). Brussels, European Commission, 2013.
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