Eurozone Crisis ppt 2.pptx

7/27/2019 Eurozone Crisis ppt 2.pptx

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Euro Zone CrisisIts Dimensions and Implications

Adisetyo NugrohoAndre Pujihantoro

Kevin Dayandra

Rabbi Amrita

Rizky Andhika Putra

Yohanes Paulus Bimoseno


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Circumstances and implication of Euro currency

formation

Background


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Crisis is not merely related to sovereign debt

and bank financials

Background


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How crisis is spreading from one euro zone

economy to the next

Background


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Problems


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Global Economic crisis 2008

pemicu meningkatnya hutang dan

menurunnya pertumbuhan Negara-negara

eropa termasuk juga Negara-negara anggota

European Union


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2010 : Sovereign Debt crisis

Peminjaman yang berlebihan oleh bank

menyebabkan terlalu banyak gagal bayar dan

juga menyebabkan Negara-negara di eropa

mengalami deficit fiscal yang besar.

Anggota European Union tidak bisa seenaknya

mencetak uang


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Negara-negara krisis

1. Portugal

2. Ireland

3. Italy

4. Greece -> Penyebab utama

5. Spain


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Greece

Fiscal deficit sebesar 12,7 persen dari GDP dan

memiliki utang public sebesar 113% dari GDP

yunani di tahun 2009

EU dan IMF sudah melakukan Baillout

sejumlah 219 milyar euro kepada Yunani


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EFSE

. EFSE didirikan oleh 27 negara anggota EU untukmenjaga kestabilan ekonomi di EU dan jugamembantu anggota yang mengalami kesulitan

financial sell bonds and use the money to make loans up

to a maximum of 440 billion to euro zonenations

Baillout sejumlah 219 milyar euro kepada Yunani,78 milliar euro kepada portugall, dan 85 milliareuro untuk irlandia


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Euro Zone Crisis

Structural

Problems

Souverign

Debt

Bank

Financial

Sistem

Moneter

Fiskal Pertumbuhan

Ekonomi

Debt

profiles


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European Union Problem

EU ingin menyamakan mata uang

Harus memenuhi syarat (inflasi dll)

Fiscal policy diserahkan ke negara

Kontrol tidak kuat

Negara defisit besar menyebabkan krisis


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Intransparency

Negara defisit besar membentuk badan usaha

Berguna untuk mendapatkan utang

Negara mengatakan tidak memilikigovernment debt

Terbongkar ketika Yunani mengganti PM

Diikuti Portugal, Spanyol, Itali, dan Irlandia


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Introduction of the new currency

Convergence in the yield of governement bonds

Interest rate dispersion between rates offerd by banks declined

It is because of common benchmarks and lower transaction costs

Source: Eurostat data


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Credit Boom 2003-2007

Keypoints:

Low Interest Rate

Currency Risk Premium

and FinancialInnovations

Credit Concentrated in

Housing (buildup in

debt from propertyboom)


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Global financial crisis disrupt financial intermediation Marking out the week from the strong

Excessive lending leads to bad debts and fiscal deficits

Sovereign Debt Crisis

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Long Term Interest Rate (%)

France

Germany

Greece

Ireland

Italy

Portugal

Spain


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Sovereign Debt Crisis Greece

Greeces fiscal deficit was

understated (3,7% 12,7%) Public Debt over 113% of GDP

Rating agencies downgraded

their debts

Increase in bond yield and risk

insurance on CDS


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Sovereign Debt Crisis Property Crash

Property Boom

Low Interest Rate

External Borrowing

Property Crash

Bank and Personal debt problem


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Critical Dimensions of the EZ Crisis


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PREVENT ECB or any national Central Bankfrom Financing Government Deficits

Possibility of Fiscal Free riding

Cannot improve through exchange rate

depreciation

EU Budget only 1% of its GDP Not Effective

Lack of Control and Regulation over national

financial institution

A monetary union without a fiscal union


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Varying Productivity and Structural Difference


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Cross Border Lending


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Decision Making System

Unanimity Among Representatives

One decision affect others

ECB constraint in on macroeconomy


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Implication of EZC & Possible Directions


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Advanced Countries

Exposure Problems

Limited capacity to accommodate liquidity of EZeconomies

CHINA Opportunities to diversify foreign

exchange assets

Could gain political mileage,acquire useful and strategicAssets

EMEs

INDIA Bilateral Trade problems


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Possible Directions

Bailout

Fiscal Consolidation

Fiscal Union Peripheral Economies Leaving the EuroZone

(Take it or leave it)


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Conclusion

Multicultural, multilanguage

Many stakeholders outside the Eurozone

Fiscal Union

Documents

Eurozone Crisis ppt 2.pptx