French budget memories of eurozone debt crisis

december 04, 2024

Just after the onset of the 2007-08 global financial crisis, disclosures of financial mismanagement in Greece almost plunged the country into bankruptcy and resulted in a loss of confidence in bond markets.

A number of countries experienced big increases in government borrowing costs, with yields on government debt in Ireland, Italy, Portugal and Spain rising from about 2% in 2009 to between 7% and 20% in 2011,

and Greek 2-year bond yields rising to 200% in 2012

In addition, the crisis threatened the survival of the euro, which was introduced in 1999.

A French sovereign-debt crisis would be a problem for the eurozone, economist says

Vivien Lou Chen MarketWatch 3 December 2024

https://www.marketwatch.com/story/u-s-investors-watch-french-budget-mess-amid-memories-of-eurozone-debt-crisis-c1118671

Quantifying the Impact of ECB Policies during the Debt Crisis

https://www.nber.org/digest/feb18/quantifying-impact-ecb-policies-during-debt-crisis

We use open market operations to steer interest rates, to manage the amount of liquidity in the financial system and to signal our monetary policy stance.

Our regular open market operations consist of one-week liquidity-providing operations in euro (main refinancing operations, or MROs)

and three-month liquidity-providing operations in euro (longer-term refinancing operations, or LTROs).

https://www.ecb.europa.eu/mopo/implement/omo/html/index.en.html

Outright Monetary Transactions (OMT),

https://englundmacro.blogspot.com/2022/06/ecbs-new-tool-may-come-up-short.html

Long-Term Refinancing Operations (LTRO)

https://englundmacro.blogspot.com/2019/09/third-series-of-so-called-targeted.html

Target2 credits have reached €920bn

https://englundmacro.blogspot.com/2019/06/target2-credits-have-reached-920bn-and.html

https://englundmacro.blogspot.com/2017/08/target-2.html

Anders Borg (TT): Den stora risken var att Grekland skulle utlösa en kris i italienska, franska och tyska banker

https://englundmacro.blogspot.com/2012/02/anders-borg-tt-den-stora-risken-var-att.html