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英国论文网:British and Dutch GDP:The spread of the cri(57)


their large banks and prevent bank failures.
Moreover, losses from housing related activities seem relatively minor in Europe
(except Spain and Ireland). This implies that the key issue in Europe is not how to
make up massive losses, but how to resolve a coordination problem which has led
to the disappearance of the vital inter-bank market.
Missed opportunity
Euro area countries had the chance to agree on a specific action for the euro interbank
market. They got one important technical detail wrong. In principle, this
should be easy to correct. But in reality this will be very difficult, as all national
leaders now have to implement the common approach at home. Once one or two
countries have started implementation, it will be extremely difficult to change
tack as these countries will naturally not take it kindly if they have to go back to
their national parliaments. Once a general principle has been set, it becomes
extremely difficult to change. In a national context the direction of action can be
changed much more quickly to adapt to quickly changing circumstances. Witness
the UK (or Germany) where a national administration performed a complete
U-turn in a very short time.
One should thus be cautious in applying the lessons from previous crises to the
European context. Certain issues are specific to Europe and certain solutions,
which might be desirable, are not politically feasible in an area that adopted a
common currency hoping that the absence of fiscal solidarity would not be tested
by the markets.
Can Europe take care of its own financial crisis? 79

6 October 2008
The liabilities of the biggest US bank equal half the US tax revenues; the ratios in
Europe are bigger. Deutsche Bank’s liabilities are one and a half times Germany’s
annual tax revenue; Barclays’ are twice Britain’s. This crisis will either leave
European financial integration in tatters or quicken the development of European
fiscal capacity. European integration is a historical process that routinely stumbles
upon crises that threaten to destroy it, only to find that it has been deepened by
the crisis.
One of the interesting and perhaps sad lessons of last weekend’s mini-summit of
European leaders in Paris is that Europe’s predicament has been made worse by
allowing financial integration to run ahead of fiscal integration.
Financial integration got ahead of Europe’s governance capacity
The logic at the time was that financial integration would reinforce the single market
and facilitate economic integration. The consequence is that Europe now has
financial institutions that are large relative to individual member states. European
financial institutions funded the acquisition of cross-border assets through the
money markets (since regulators make it expensive to acquire deposits). Now the



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