Euro’s Fall May Doom All
By Matthew Richardson, Charles E. Simon Professor of Applied Economics, Sidney Homer Director, Salomon Center for Research in Financial Institutions and Markets and Professor of Finance, Thomas Cooley, Paganelli-Bull Professor of Business and International Trade, & Kermit Schoenholtz, Professor of Management Practice and Director of the Center for Global Economy and Business
Euro-area policymakers are finally talking about the kind of bold reforms needed to fix their ailing system. But they’ve waited so long that they’re now racing against time, and a collapse can’t be ruled out.
Leveraged to the hilt and broadly exposed to the risky debt of countries on the brink of default, many euro-area banks are floundering, so depositors and other bank creditors are running for the hills. Unless the run can be halted, it will at some point shut down much of the banking system in the euro area.
Read full article as published in the New York Post.