This note weighs the merits of a capital market union (CMU) for Europe, identifies major obstacles in its path, and recommends a set of carefully targeted policy actions. European capital markets are relatively small, resulting in strong bank-dependence, and are split sharply along national...

This paper evaluates the impact of the crisis on European banks' capital under a range of macroeconomic scenarios, using granular data on the size and riskiness of sectoral exposures. The analysis incorporates the important role of pandemic-related policy support, including not only regulatory...

The euro area has experienced an unprecedented economic downturn and exceptional financial market turmoil in the past few years. Policymakers have faced the twin challenges of addressing cyclical economic weakness--not unlike other industrial countries following the global economic crisis--and...

Current discussions on Economic and Monetary Union (EMU) in Europe have stressed the need for enhanced integration of goods and factor markets as a pre-condition of moving as costlessly as possible to a single currency system. The real interest differential--and hence tests of real interest...

Is further economic convergence between European Monetary System (EMS) member countries desirable? This paper addresses some of the convergence issues currently being raised in the debate over Economic and Monetary Union (EMU) in Europe, with particular emphasis on the behavior of real interest...

Cover -- Contents -- Foreword -- Acknowledgments -- Preface -- Contributors -- Abbreviations and Acronyms -- PART I: THE LEGACIES OF THE CRISIS -- 1 Investment in the Euro Area: Why Has It Been Weak? -- 2 Indebtedness and Deleveraging in the Euro Area -- 3 Rebalancing: Where Do We Stand and...

Among member states, many structural weaknesses were exposed when economic performance declined significantly and financial markets became more discerning. This book focuses on the analytical underpinnings of real-time policy advice given to euro area policymakers during four cycles of the IMF's...