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Financial Security and the Union Bank (DIEEEO55-2012)

Before 2008 nobody could believe that European Union member country could request a bailout or fall into insolvency. But that is what happened in Greece in March 2012, that forced its international creditors into a restructuring that meant to lose 53.5% of the face value of their bonds.
If the Spanish crisis reaches the degree of an extreme insolvency, the cost would be terrible for Spain and its creditors. Dutch banks have granted loans to Spain amounting 7.9% of Dutch GDP. An amount that could be lost in this extreme circumstance. The same situation could cost Germany 4% of GDP in bad loans and France could lose in this case 4.1% of GDP. This article analyzes which countries finance Europe. These data allow quantifying the risk posed by the current crisis in the field of finance. The article analyzes how the process of European integration has facilitated this outcome. Finally, the text analyzes how a Banking Union could become the main mechanism to address the negative aspects of this financial integration.

Author: Íñigo Moré


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Financial Security and the Union Bank
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