Report
Could there be another crisis in the euro zone, like the one in 2010-2013?
The euro-zone crisis from 2010 to 2013 was a balance of payments crisis (a “sudden stop”): the peripheral countries’ external deficits could no longer be financed; these external deficits therefore had to disappear, which in a currency area is obtained through a contraction in domestic demand caused by the rise in interest rates. As long as a country has an external surplus, i.e. a savings surplus, it is unlikely to suffer a balance of payments crisis or a domestic debt crisis, since the savings surplus at equilibrium must be lent and since there is a preference for domestic financial assets. For a crisis to occur, domestic savers would have to transfer a significant portion of their savings abroad, which is unlikely. A crisis could therefore reappear today in the euro zone if a country had an excessive external deficit that became difficult to finance. Currently, this could only concern France and Greece and, to a lesser degree, Portugal, but not Spain or Italy.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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