Euro Area: Locked in a Cycle of Market Pressure and Policy Response

 The European Central Bank (ECB) has raised the prospect of a more effective bond-purchase programme. Unfortunately, it may require additional market pressure for governments to unlock that support.

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Draghi’s Dilemma: How to Meet
Heightened Expectations

European Central Bank Governor Mario Draghi has raised expectations ahead of this week’s ECB Governing Council meeting.

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Is Germany an Example Other
Euro-Area Countries Can Follow?

Germany may have the strongest economy in the troubled euro area, but the euro has not been a massive “free lunch”, as some critics claim. Germany’s strength has come at the cost of many painful years of sacrifice.

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Greece Gains Some Breathing Space

Today, New Democracy (ND) leader Antonis Samaras will try to form a government. If he succeeds, an immediate disaster scenario will have been avoided. The question is: for how long? 

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Greek Election Will Be a Watershed in the Euro Crisis

As Greek voters prepare to go to the polls on Sunday, we are approaching a pivotal stage in the sovereign-debt crisis—and, perhaps, in the post-war history of European economic and political integration.

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Spanish Bank Rescue Package Is a Step in the Right Direction

The €100bn rescue package agreed for Spanish banks over the weekend is credible and, to that extent, should be welcomed. But it is not enough, by itself, to stabilize markets on a sustained basis.

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A Credible Recapitalization of Spanish Banks Is Now Imperative

A  credible recapitalization of the Spanish banks is now a necessary, though not sufficient, condition to stabilize markets. But there is disagreement about how to achieve this—increasing the risk of a damaging standoff and further volatility in European sovereign-debt markets.

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Euro-Area Leaders Need to Focus on More Pressing Issues

A surprising amount of common ground was reached at last week’s informal meeting of European Union leaders—but  there wasn’t agreement on joint issuance of Eurobonds.

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What Will Happen if Greece Leaves the Euro Area?

With party leaders failing to set aside their differences, Greece is set to hold another general election on June 17. The outcome is hard to predict, but one thing is clear: a Greek exit from the euro area is now a possibility that investors need to take very seriously. 

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Spanish Jitters Reveal Euro’s Fragility

Yields on 10-year Spanish government bonds have risen by 100 basis points since the beginning of March.  With attention now switching back to Spain, it seems the brief hope provided by the European Central Bank’s massive liquidity injections has proved to be a false dawn. Why has confidence evaporated so quickly?

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