Publication

This policy brief reviews the causes of the European financial crisis and the policies needed to restore stability in financial markets and reassure the public. The author argues that financial market pressures will only subside if a solid consensus on a policy framework is reached and implemented. This framework should reconcile austerity with growth, while also dealing with the debt overhang, and should further ensure that the European Central Bank can provide adequate liquidity support without endangering its balance sheet and independence.