kjuity
Thessaloniki Model United Nations
12th Annual Session - November 29 – December 1, 2013
COMMISSION ON ECONOMIC AND SOCIAL
DEVELOPMENT
1. THE EURO-ZONE FINANCIAL CRISIS AND ITS
IMPLICATIONS FOR INTERNATIONAL ECONOMY
BACKGROUND FILE
12th TMUN – Commission on Economic and Social Development – Background File
Page 2
DEFINING THE FINANCIAL CRISIS
“We knew that a storm was brewing out but, admittedly, we did not know exactly where. Neither did we know what would trigger it, or when it would come.”
Jean-Claude Trichet, President of the ECB. Keynote address in Mackowiak (2009)
As the Euro-zone celebrated its 10th anniversary, the global financial crisis, which had begun in
2007, triggered a second crisis, known as the sovereign debt crisis. Whereas the former was a USborn financial crisis, the latter was a public debt crisis concentrated in the Euro-zone area. The two crises have a profound impact on the monetary integration in Europe, which in turn has severe implications for the international economy.
BACKGROUND INFORMATION
Euro-zone: A Major Player in the Global Economy in terms of trade and finance
The Euro-zone is a major “player” in the international economy, as it produces almost a fifth of global output. The Euro-zone‟s combined exports and imports account to almost 30 percent of world GDP. In addition to its trading sectors, the Euro-zone‟s financial sector is regarded as one of the largest in the world. Its banking exposures to other countries exceed those of all other economies. After all, the euro is the reserve currency after the U.S. dollars. Its share of global reserves is constantly increasing since the inception of the common currency. It becomes evident that any changes in the Euro-zone can potentially have large spillover effects on the international economy. These spillover effects can occur through the Euro-zone‟s financial or trading sectors.
THE EURO-ZONE‟S TRADE EXPOSURE ON A GLOBAL SCALE
12th TMUN –
12th Annual Session - November 29 – December 1, 2013
COMMISSION ON ECONOMIC AND SOCIAL
DEVELOPMENT
1. THE EURO-ZONE FINANCIAL CRISIS AND ITS
IMPLICATIONS FOR INTERNATIONAL ECONOMY
BACKGROUND FILE
12th TMUN – Commission on Economic and Social Development – Background File
Page 2
DEFINING THE FINANCIAL CRISIS
“We knew that a storm was brewing out but, admittedly, we did not know exactly where. Neither did we know what would trigger it, or when it would come.”
Jean-Claude Trichet, President of the ECB. Keynote address in Mackowiak (2009)
As the Euro-zone celebrated its 10th anniversary, the global financial crisis, which had begun in
2007, triggered a second crisis, known as the sovereign debt crisis. Whereas the former was a USborn financial crisis, the latter was a public debt crisis concentrated in the Euro-zone area. The two crises have a profound impact on the monetary integration in Europe, which in turn has severe implications for the international economy.
BACKGROUND INFORMATION
Euro-zone: A Major Player in the Global Economy in terms of trade and finance
The Euro-zone is a major “player” in the international economy, as it produces almost a fifth of global output. The Euro-zone‟s combined exports and imports account to almost 30 percent of world GDP. In addition to its trading sectors, the Euro-zone‟s financial sector is regarded as one of the largest in the world. Its banking exposures to other countries exceed those of all other economies. After all, the euro is the reserve currency after the U.S. dollars. Its share of global reserves is constantly increasing since the inception of the common currency. It becomes evident that any changes in the Euro-zone can potentially have large spillover effects on the international economy. These spillover effects can occur through the Euro-zone‟s financial or trading sectors.
THE EURO-ZONE‟S TRADE EXPOSURE ON A GLOBAL SCALE
12th TMUN –
References: De Grauewe, P. (2011) „The European Central Bank as a Lender of Last Resort‟, VoxEU, http://www.voxeu.org/index.php?q=node/6884