Summary of Disappearing Government Bond Spreads in the Eurozone
Back to Normal?
Can the euro and the euro zone survive without democratic accountability?
Spreads on sovereign debt in 2014 are far more amenable to euro-zone governments than they were in 2010 to 2012, yet the finances of many of the peripheral members are far from healthy. The breathing space afforded by lower rates is largely due to intervention from the European Central Bank (ECB), whose actions have drawn sharp rebuke from some, particularly in Germany. getAbstract recommends this brief paper for its cogent analysis of the euro sovereign-debt markets, the opposition to ECB programs and the implications of political union on the future of the euro.
In this summary, you will learn
- Why the German Constitutional Court objects to the European Central Bank’s actions
- Whether the court’s reasoning is correct
- What governance changes are necessary to safeguard the future of the euro
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David Wessel and Peter Olson
Brookings Institution, 6/2016