Banking union: Ireland vs Nevada, an illustration of the importance of an integrated banking system
Daniel Gros 27 November 2012
An integrated banking system saved Nevada after a local real estate boom turned to bust. Without an integrated banking system, the same wasn’t true of Ireland. This column argues that comparing Ireland and Nevada shows that banking union is far more important for Europe than current proposals of fiscal union. And, in the absence of a proper banking union that covers losses, it seems ever more likely that Europe will be pushed back towards nationally segmented financial markets.
The Eurozone crisis has demonstrated how an insolvent sovereign can destroy a national banking system, Greece, but also how an insolvent banking system can almost sink the sovereign – Ireland and Spain (Wyplosz 2012).
EU institutions EU policies
ECB, Ireland, fiscal union, banking union, Nevada
Club Med and the Sun Belt: Lessons from adjustment within a monetary union
Uri Dadush, Zaahira Wyne, Shimelse Ali 24 July 2012
The US and the Eurozone are slowly recovering after the bursting of their huge housing bubbles. Yet the hardest-hit states in the US have adjusted more rapidly than the most troubled European economies. This column examines differences between the US and Eurozone monetary unions that can help explain why.
The experiences of a few US states in weathering the ongoing economic turmoil could provide some insight into the Eurozone’s struggles. In particular, Florida, Arizona, and Nevada along the US Sun Belt saw a big housing bubble and subsequent bust, much like Greece, Ireland, and Spain along Europe’s periphery, a group we call ‘Club Med’. Both groups, each part of a monetary union, continue to suffer severely from the after effects of the crisis, but the Sun Belt states have recovered earlier and have not faced the trauma of a sovereign debt crisis.
Europe's nations and regions Global economy Labour markets Monetary policy
Spain, monetary union, Ireland, housing bubble, Greece, Eurozone crisis, Florida, Arizona, Nevada