The Eurozone sovereign debt crisis stems from a failure in risk management design. In this paper we first present a formal model to clarify the nature of this failure, and then use it to analyse possible solutions. We argue that a longterm solution must involve institutional innovation based on the mutual insurance principle.We also critically discuss existing proposals in the light of our results.
CITATION STYLE
Rees, R., & Arnold, N. (2017). Approaches to solving the Eurozone sovereign debt default problem. In Monetary Policy, Financial Crises, and the Macroeconomy: Festschrift for Gerhard Illing (pp. 265–295). Springer International Publishing. https://doi.org/10.1007/978-3-319-56261-2_13
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