Confidence in the euro zone has never really returned since the 2008 crisis

International investors lost confidence in the euro zone during the 2008 crisis and even more so during the 2010-2013 euro-zone crisis, and this confidence has not yet made a lasting return. Confidence in the euro zone has also been lost within the euro zone itself. Confidence can be measured by capital flows to the euro zone, TARGET2 balances and cross-border claims in the euro zone. The loss of confidence in the euro zone can be explained by tensions that could lead to a break-up of the euro zone: end of capital mobility between the euro-zone countries, the rise of anti-European political parties, the sharp rise in structural unemployment in some countries and the decline in living standards in several countries. If the euro zone did not have a very large external surplus, this loss of confidence would lead to a sharp depreciation of the euro’s exchange rate.