the sovereign debt crisis and the future of the eurozone 2015 (1).pdf · the sovereign debt crisis...
TRANSCRIPT
The Sovereign Debt Crisis and the Future of the
Eurozone
Paul De Grauwe
London School of Economics
Outline of presentation
• Legacy of the sovereign debt crisis
• Design failures of Eurozone
• Redesigning the Eurozone:
o Role of central bank
o Role of banking union
o Towards a budgetary and political union?
Eurozone split into creditor and debtor nations
-200
-150
-100
-50
0
50
100
15019
91
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
per
cen
t G
DP
Figure 5: Cumulated current accounts
Belgium
Germany
Ireland
Greece
Spain
France
Italy
Netherlands
Austria
Portugal
Finland
• Creditor nations have imposed their rule:
Thou shall repay thy debt
• In order to achieve this, austerity rule is
imposed
• This has created asymmetric adjustment
mechanism where most of the adjustment
has been borne by the debtor nations
• Without compensating stimulus by the
creditor nations
90
95
100
105
110
115
120
125
130
135
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Tit
olo
ass
e
Relative unit labour costs Eurozone: debtor nations
Italy
Ireland
Spain
Portugal
Greece
80
85
90
95
100
105
110
115
120
125
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Tit
olo
ass
e
Relative unit labour costs Eurozone: creditor nations
Finland
Belgium
Netherlands
France
Austria
Germany
• Asymmetric adjustment mechanism has created
deflationary bias in the Eurozone
• Leading to significant poorer economic
developments in Eurozone as compared to rest of
developed economies
Stagnation in Eurozone
90
95
100
105
110
115
120
125
130
135
2000 2002 2004 2006 2008 2010 2012 2014
ind
ex 2
000=
100
Figure 1: Real GDP in Eurozone, EU10 and US
(prices of 2010)
Eurozone
EU10
US
Increasing unemployment
0
2
4
6
8
10
12
14
2000 2002 2004 2006 2008 2010 2012 2014
per
cen
t ac
tiv
e p
op
ula
tio
n
Figure 5: Unemployment rate in Eurozone, EU10 and US
Eurozone
EU10
US
Increasing savings as a result of austerity
-3
-2
-1
0
1
2
3
4
2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3
per
cen
t G
DP
Figure 6: Current account Euro area
Deflation threat
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
per
cen
t
Figure 7: Inflation in US and Eurozone
US Eurozone
• Most striking feature of legacy of Eurocrisis is
that despite intense austerity programs that
have been triggered since 2010
• there is no evidence that these programs
have increased the capacity of the
governments of the debtor countries to
continue to service their debt
• On the contrary: deflation makes it harder to
reduce debt burdens
Secular stagnation increases debt burdens
0
20
40
60
80
100
120
140
160
180
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
per
cen
t G
DP
Figure 4: Gross government debt to GDP ratio
Ireland
Greece
Spain
Italy
Portugal
Pain in Spain
Debt to GDP dynamics:
∆D = (r – g)D – S
S = primary budget surplus,
r = nominal interest rate on the government debt,
g = nominal growth rate of the economy
D = government debt to GDP ratio.
Let us contrast Spain and the UK
0
1
2
3
4
5
6
7
2010 2011 2012 2013 2014
Figure 3: 10-year Government bond yields
UK
Spain
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2009 2010 2011 2012 2013 2014
Figure 4: Nominal growth GDP in UK and Spain
UK
Spain
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2010 2011 2012 2013 2014
Figure 5: Nominal interest rate - nominal growth rate
UK
Spain
20
30
40
50
60
70
80
90
100
110
2007 2008 2009 2010 2011 2012 2013 2014
per
cen
t G
DP
Figure 2: Government Debt to GDP ratio in Spain and UK
Spain UK
TINA • Is austerity not a necessary price to pay in order to
redress the disequilibria in the Eurozone?
• Issue is not whether the periphery had to engage in
austerity or not. They had to (although they should
have been allowed more time).
• The issue is whether for the Eurozone as a whole a
more symmetric adjustment may not have
improved the unfavourable tradeoff between
budget balance and economic growth in the
periphery.
• It is my contention that a more symmetric fiscal
adjustment (creditor nations stimulate their
economies)
• would have reduced the price the periphery had
to pay (in terms of lost output) to achieve a given
improvement in their government budget balances.
Fallacy of composition • The imposition of austerity programs in the Eurozone
has been victim of the “fallacy of composition”.
• What works for one nation fails to work when everybody applies the same policies.
• When one nation is forced to deleverage through austerity (i.e. is trying to save more) this may work when it is alone to do so.
• When, however, all the countries try to save more at the same time, i.e. they all attempt to create current account surpluses, each country’s attempt to do so makes it harder for the others to achieve their objectives, forcing them to increase their austerity efforts.
• In the end, they are not more successful but GDP will be lower everywhere.
European Commission: the
agent of creditor nations • European Commission as the guardian of the
interests of the Eurozone as a whole did not take
the system-wide implications of generalized
austerity programs into account.
• This may have something to do with the fact that
the Commission acted as an agent defending the
interests of the creditor nations,
• and not the interests of the Eurozone as a whole
Austerity also leads to breakdown of social security
• I look into how two different categories of
spending for social security have been
affected
o Health care
o Social protection
Health spending most affected
y = -2,4101x + 2,2161
R² = 0,6061
-35
-30
-25
-20
-15
-10
-05
00
05
10
-2 0 2 4 6 8 10 12 14
hea
lth
sp
end
ing
(cu
mu
lati
ve
gro
wth
)
austerity(percent GDP)
Austerity and real growth in health spending (2009-11)
y = -0,3556x + 2,321
R² = 0,2093
-10
-08
-06
-04
-02
00
02
04
06
08
10
-2 0 2 4 6 8 10 12 14
spo
cial
sp
end
ing
(cu
mu
lati
ve
gro
wth
austerity (% GDP)
Austerity and real growth spending social protection (2009-11)
Eurozone undermines legitimacy of governments
• Austerity undermines legitimacy of
governments that entered Eurozone with
mandate to provide some protection
against booms and busts of capitalism
• This mandate is being eroded.
• At the same time austerity has weakened
capacity of governments to service their
debts
• Sooner or later political systems in periphery
will crack under the burden
• Especially when it is recognized that the
benefits of austerity are for the rich creditor
nations,
• Success of Syriza and Podemos is direct
result of this failed policy
Options for the future
1. Solving legacy of eurocrisis
o Debt restructuring
o Debt monetization?
2. Correcting for design failures
Solving legacy problem
• legacy of the crisis has led to unsustainable
debt levels
• Debt default (restructuring) in a number of
countries will be inevitable
• Only issue: when?
• Rational solution dictates that creditor
nations accept a loss now (after all they
are equally responsible for the mess)
• Unlikely to happen
• Large part of claims are now in public
hands o In many Northern countries, Manichean views of
good and evil prevail, leading to an emotional
desire that evil be punished.
o This attitude makes it difficult for politicians in these
countries to choose the rational outcome that
would increase economic welfare for everybody.
Eurozone’s design failures
and the role of the ECB
Paul De Grauwe
Eurozone’s design failures: in a nutshell
1. Dynamics of booms and busts are endemic in
capitalism
o continued to work at national level and monetary union in no
way disciplined these into a union-wide dynamics.
o On the contrary the monetary union probably exacerbated
these national booms and busts.
2. Stabilizers that existed at national level were stripped
away from the member-states without being
transposed at the monetary union level.
o This left the member states “naked” and fragile, unable to deal
with the coming disturbances.
3. Deadly embrace sovereign and banks
Let me expand on these points.
Design failure I
Booms and bust dynamics: national
• In Eurozone money is fully centralized
• All the rest of macroeconomic policies is organized at national level
• Thus booms and busts are not constrained by the fact that a monetary union exists.
• As a result, these booms and busts originate at the national level, not at the Eurozone level, and can have a life of their own for quite some time.
• At some point though when the boom turns into a bust, the implications for the rest of the union become acute
•
Monetary union can exacerbate
national booms and busts
• In fact the existence of the monetary union can
exacerbate booms and busts at the national level.
• This has to do with the existence of only one policy
interest rate when underlying macroeconomic conditions
are very different.
• The fact that only one interest rate exists for the union
exacerbates these differences,
o i.e. it leads to a stronger boom in the booming countries and
o a stronger recession in the recession countries than if there had
been no monetary union.
Design failure II:
no stabilizers left in place
• Lender of last resort existed in each member country at
national level.
• Absence of lender of last resort in government bond market
in Eurozone
• exposed fragility of government bond market in a monetary
union
Fragility of government bond market
in monetary union
• Governments of member states cannot guarantee to
bond holders that cash would always be there to pay
them out at maturity
• Contrast with stand-alone countries that give this implicit
guarantee
o because they can and will force central bank to provide liquidity
o There is no limit to money creating capacity
Self-fulfilling crises
• This lack of guarantee can trigger liquidity crises
o Distrust leads to bond sales
o Interest rate increases
o Liquidity is withdrawn from national markets
o Government unable to rollover debt
o Is forced to introduce immediate and intense austerity
o Producing deep recession and Debt/GDP ratio increases
• This leads to default crisis
• Countries are pushed into bad equilibrium
• This happened in Ireland, Portugal and Spain
o Greece is different problem: it was a solvency
problem from the start
• Thus absence of LoLR tends to eliminate other
stabilizer: automatic budget stabilizer
o Once in bad equilibrium countries are forced to
introduce sharp austerity
o pushing them in recession and aggravating the
solvency problem
o Budget stabilizer is forcefully switched off
Banking crisis
• When investors pull out from domestic bond market,
interest rate on government bonds increases, and
prices plunge; domestic banks make large losses.
• Domestic banks are caught up in a funding problem. – As argued earlier, domestic liquidity dries up (the money stock
declines)
– making it difficult for the domestic banks to rollover their deposits,
except by paying prohibitive interest rates.
• Thus the sovereign debt crisis spills over into a
domestic banking crisis, even if the domestic banks
were sound to start with.
• Deadly embrace between sovereign and banking
sector
Summary
• The Eurozone was left unprepared to deal with
endemic booms and busts in capitalism
o Probably these were even enhanced because of the
existence of the monetary union
• While nothing was in place to stabilize an
unstable system that pushed some countries
into bad equilibria and others in good equilibria
• In fact some of the pre-existing stabilizing forces
were switched off
How to redesign the Eurozone
• Role of ECB
• Coordination of macroeconomic
policies in the Eurozone
• Political Union o Banking Union
o Fiscal Union
Role of ECB
The common central bank
as lender of last resort
Liquidity crises are avoided in stand-alone
countries that issue debt in their own
currencies mainly because central bank will
provide all the necessary liquidity to
sovereign.
This outcome can also be achieved in a
monetary union if the common central bank
is willing to buy the different sovereigns’ debt
in times of crisis.
Analogy with banks
• Banks borrow short and lend long
• As a result they are vulnerable to collective
movements of distrust
• When all depositors run to the bank
• Bank does not have liquidity to pay out all
deposit holders
• This fragility has been eliminated by the
implicit guarantee that central bank will
provide liquidity in times of crisis (lender of
last resort)
• Governments’ assets and liabilities in a monetary union have the same structure as those of the banks.
• Governments’ liabilities are liquid while most of their assets are illiquid (e.g. infrastructure, tax claims).
• Thus when bondholders massively sell bonds, these governments may not be able to generate enough cash to pay out bondholders at maturity
• That’s why they need central bank
ECB has acted 2012
• On September 6, ECB announced it will buy
unlimited amounts of government bonds.
• Program is called “Outright Monetary
Transactions” (OMT)
• Success was spectacular
Success OMT-program
0
5
10
15
20
25
30
1/1/
08
4/1/
08
7/1/
08
10/1
/08
1/1/
09
4/1/
09
7/1/
09
10/1
/09
1/1/
10
4/1/
10
7/1/
10
10/1
/10
1/1/
11
4/1/
11
7/1/
11
10/1
/11
1/1/
12
4/1/
12
7/1/
12
10/1
/12
1/1/
13
4/1/
13
7/1/
13
per
cen
t
Figure 7: Spreads 10-year government bond rates eurozone
Greece
Portugal
Spain
Italy
Ireland
Belgium
France
Austria
Netherlands
Finland
• This was the right step: the ECB saved the
Eurozone
• But then ECB waited too long to stop
deflationary dynamics
• Only in January 2015 did it act to fight deflation
• QE-programme: monthly purchase of €60 billion
until at least Sept 2016: planned increase in
balance sheet (money base) = €1 trillion
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
tril
lio
n d
oll
ars
or
euro
s Figure 2: Balance Sheet FED and ECB (2004-14)
FED ECB
Role ECB
is put into question again
• German Constitutional Court has declared OMT to be illegal and urges ECJ to impose restrictions on OMT, i.e. its unlimited support
• Only under those conditions is it willing to accept legality
• If accepted OMT would be ineffective and risk of new self-fulfilling crises would emerge again
• Advocate-General of ECJ has made preliminary ruling that OMT is legal according to European law.
• Possible clash between two courts
Criticism of OMT
• Three points of criticism o Inflation risk
o Moral hazard
o Fiscal implications
• Is this criticism valid?
Inflation risk Distinction should be made between money
base and money stock
When central bank provides liquidity as a
lender of last resort money base and money
stock move in different direction
In general when debt crisis erupts, investors
want to be liquid
50
80
110
140
170
200
230
20
04Jan
20
04M
ay
20
04A
ug
20
04N
ov
20
05F
eb
20
05M
ay
20
05A
ug
20
05N
ov
20
06F
eb
20
06M
ay
20
06A
ug
20
06N
ov
20
07F
eb
20
07M
ay
20
07A
ug
20
07N
ov
20
08F
eb
20
08M
ay
20
08A
ug
20
08N
ov
20
09F
eb
20
09M
ay
20
09A
ug
20
09N
ov
20
10F
eb
20
10M
ay
20
10A
ug
20
10N
ov
20
11F
eb
20
11M
ay
20
11A
ug
20
11N
ov
20
12F
eb
20
12M
ay
20
12A
ug
20
12N
ov
20
13F
eb
Money Base M3
Figure 1: Money Base, Money Stock (M3) in Eurozone
• Thus during debt crisis banks accumulate
liquidity provided by central bank
• This liquidity is hoarded, i.e. not used to extend
credit
• As a result, money stock does not increase; it
can even decline
• No risk of inflation
• Same as in the 1930s (cfr. Friedman)
Deflation threat
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
perc
en
t
Figure 7: Inflation in Eurozone
Moral hazard
Like with all insurance mechanisms there is a risk of moral hazard.
By providing a lender of last resort insurance the ECB gives an incentive to governments to issue too much debt.
This is indeed a serious risk.
But this risk of moral hazard is no different from the risk of moral hazard in the banking system.
It would be a mistake if the central bank were to abandon its role of lender of last resort in the banking sector because there is a risk of moral hazard.
In the same way it is wrong for the ECB to abandon its role of lender of last resort in the government bond market because there is a risk of moral hazard
Separation of liquidity provision
from supervision
The way to deal with moral hazard is to impose rules
that will constrain governments in issuing debt,
very much like moral hazard in the banking sector is
tackled by imposing limits on risk taking by banks.
In general, it is better to separate liquidity provision
from moral hazard concerns.
Liquidity provision should be performed by a central
bank; the governance of moral hazard by another
institution, the supervisor.
• This should also be the design of the governance within
the Eurozone.
• The ECB assumes the responsibility of lender of last
resort in the sovereign bond markets.
• A different and independent authority (European
Commission) takes over the responsibility of regulating
and supervising the creation of debt by national
governments.
• This leads to the need for mutual control on debt
positions, i.e. some form of political union
Metaphor of burning house
To use a metaphor: When a house is burning the fire department is responsible for extinguishing the fire.
Another department (police and justice) is responsible for investigating wrongdoing and applying punishment if necessary.
Both functions should be kept separate.
A fire department that is responsible both for fire extinguishing and punishment is unlikely to be a good fire department.
The same is true for the ECB. If the latter tries to solve a moral hazard problem, it will fail in its duty to be a lender of last resort.
Fiscal consequences
• Third criticism: lender of last resort operations in the
government bond markets can have fiscal
consequences.
• Reason: if governments fail to service their debts, the
ECB will make losses. These will have to be borne by
taxpayers.
• Thus by intervening in the government bond markets,
the ECB is committing future taxpayers.
• The ECB should avoid operations that mix monetary
and fiscal policies
Fiscal implications: one country
• When central bank buys government bonds it
substitutes one type of liabilities of the public sector
with another one.
o Government bonds that promise a fixed interest rate are
replaced by a monetary liability without interest but carrying
an inflation risk.
o Note: if this is done to fight deflation it is welfare improving
• As a result, it changes the budget constraint of the
government.
o By monetizing government debt the central bank relieves the
government from paying interest on the debt.
o This is the moment seigniorage is created.
• Most central banks maintain fiction that the government bonds still exist economically by keeping them on their balance sheet.
• These bonds are just a claim of one branch of the public sector (the central bank) against another branch of the public sector (the government).
• These two branches should be consolidated into the public sector and then these claims and liabilities cancel out.
• Another way to see the same thing is by
considering the flows.
o When the government bonds are kept on the
balance sheet of the central bank, the
government transfers interest to the central bank.
o The latter then transfers this interest revenue
back to the government.
o They could as well agree to stop this comedy
Implication
• Central bank can write-off these bonds (and reduce
the equity in the same amount; a central bank does
not need equity in contrast to private company).
• This makes no difference for the government budget
(and the taxpayer).
• As long as the money base is not reduced, the
government continues to enjoy the yearly
seigniorage
o that arises from the fact that it does not have to pay interest
on the debt that the central bank has purchased.
• The seigniorage is independent of the value given to
the bonds in the balance sheet of the central bank
and of the equity posted by the central bank.
What about a monetary union
(Eurozone)? • More complicated in a monetary union where
one central bank faces 19 governments
(Eurozone).
• Complication arises because a bond-buying
program can lead to a fiscal transfer between
member-countries.
• Bond-buying program can be organized in
such a way that it does not lead to fiscal
transfers
• even if one of the participating member
countries’ government defaults.
How can this be achieved?
• The rule of “juste retour”: the interest on the
government bonds purchased from the
different member countries is returned to the
same governments in the same amounts.
• Such a rule ensures that any write-off of
government bonds due for example to a
default, leaves the taxpayers of the other
countries unaffected.
Example: Italy defaults • Suppose after QE Italy defaults on total debt,
quite a catastrophic event
• Italy stops paying interest on €179 billion to the
ECB,
• Under “juste restour” ECB stops paying back the
same amount of interest to the Banca d’Italia
(and hence to the Italian Treasury).
• The other interest flows between the ECB and the
other national central banks remain unaffected.
• There is no fiscal transfer
• German and Dutch taxpayers can sleep quietly:
ECB pays back the same amount of interest he
has paid to the ECB
What about write-off of Italian
bonds? • ECB just puts value of the Italian bonds
equal to zero and reduces equity by the
amount of the write-off
• This is just an accounting convention
• It does not affect the yearly seigniorage that
the other member countries enjoy
• The latter remains the same as long as the
ECB keeps the money base unchanged
ECB balance sheet before Italian default (in billion euros A L
Government bonds: 1,000
Money base: 1,000
ECB balance sheet after Italian default A L
Government bonds: 821 Money base: 1,000 Equity: -179
Total: 821
• The recently announced ECB bond-buying
program has this “juste retour” feature for
80% of the program.
• Technically this is achieved by keeping the
government bonds on the balance sheets
of the national central banks.
• These could also have been kept on the
ECB’s balance sheet using the rule of “juste
retour” described earlier
Coordination of macroeconomic
policies in the Eurozone
Towards symmetric
macroeconomic policies
Stimulus in the North, where spending is below
production (current account surplus)
Austerity in the South (but spread out over more
years)
This also allows to deal with current account
imbalances
It takes two to tango
This symmetric approach should start from the
different fiscal positions of the member countries of
the Eurozone
Coordination of macroeconomic
policies: “Six-pack” measures • “Six pack” of measures strengthening the control on
budgetary policies and coordinating macroeconomic policies have been adopted and are being put into place. o tightening of the mutual control on each member’s
budgetary situation (the so-called Stability and Growth Pact) including a stronger sanctioning procedure;
o the “European Semester”, which requires national governments to present their annual budgets to the European Commission prior to their approval in national parliaments;
o the monitoring of a number of macroeconomic variables (current account balances, competitiveness measures, house prices and bank credit) aimed at detecting and redressing national macroeconomic imbalances;
However
• This procedure is being implemented in an asymmetric way
• Deficit countries experience much more pressure to act, i.e. to reduce spending than surplus countries
• Competitiveness measures have same problem
o This leads to downward pressure on wages
• Deflationary bias is not solved
• The creditor countries prevail
• Creating political problems
• And rejection of system in which European Commission is seen to defend interests of creditor nations and remains unaccountable
Que faire?
• Policy mix should be:
oMonetary and fiscal expansion
• ECB has started QE
• Fiscal policy should focus on public
investment
• Why?
• It is one of the major victims of ill-advised
macroeconomic policies in Eurozone
Austerity programs led to strong decline in public investment
1,5
1,7
1,9
2,1
2,3
2,5
2,7
2,9
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Tit
olo
ass
e
Figure 8: General government gross fixed capital formation (%GDP)
• Leading to less aggregate demand today
• And less supply in the future
• Thus, start public investments
• These can be initiated everywhere,
• but especially in Germany, a country that
can borrow almost for free
Throw away dogmas
• We have to free ourselves of dogmas
• One such dogma: balanced budget, i.e. no bond
financing of investments
o All investments should be financed by current
revenue
o No well run company follows such a rule
• Result of this idea is that governments are reducing
their responsibility to provide essential public goods
(infrastructure, energy investments, environmental
investments)
• This reduces long-term growth of the Eurozone
Towards a political union
Towards a political union
Two components of political union are
necessary
o Banking Union
o Fiscal Union
Banking Union
• Banking Union is key in resolving the deadly embrace between sovereign and banks
• Three components: 1. Common supervision
2. Common deposit insurance
3. Common resolution
• Common supervision starts now with ECB as the common supervisor of the large banks (covering 85% of bank activities in Eurozone)
• No decision on common deposit insurance
• First steps towards common resolution
o Common resolution fund will be built up
gradually to reach €55 billion
o This is clearly insufficient
o Governance of resolution is so complicated as to
be impractical in times of crisis
Fiscal union
• Only governance that can be sustained in the
Eurozone is one where a Eurozone government
backed by a European parliament acquires
the power to tax and to spend.
• Put differently, the Eurozone can only be
sustained if it is embedded in a fiscal and
political union.
Fiscal union has two dimensions
1. consolidation of national government debts.
o consolidation creates a common fiscal authority
that can issue debt in a currency under the
control of that authority.
o This protects the member states from being forced
into default by financial markets.
o This restores the balance of power in favour of the
sovereign and against the financial markets
2. mechanism of automatic transfers
o Such a mechanism works as an insurance
transferring resources to the country hit by a
negative economic shock.
o There are limits to such an insurance that arise
from moral hazard risk,
o But it remains true that such a mechanism is
essential for the survival of a monetary union, like
it is for the survival of a nation state.
o Without a minimum of solidarity (that’s what
insurance is) no union can survive.
• All this is well known.
• It is equally clear that the willingness today
to move in the direction of a fiscal union in
Europe today is non-existent.
• This fact will continue to make the Eurozone
a fragile institution,
Conclusion
• The long run success of the Eurozone depends on
the continuing process of political unification.
• Which includes a fiscal union
• Such a political unification is also needed
because eurozone has dramatically weakened
the power and legitimacy of nation states
without creating a nation at the European level.
• This cannot last
• It is doubtful that there is a will to create such a
political union
• The future of the Eurozone is very much in doubt