VSLike an air of deja vu: an unpleasant and anxiety-provoking chant that hadn’t resonated for almost a decade in our European countries. In recent weeks, the specter of a debt crisis has returned to the euro zone. Fear, with its corollary of words recalling the painful memory of the financial turbulence of 2011-2012. Following the example of “spread”, this term considered to be the barometer of risk, designating the difference between German sovereign rates – the reference in terms of budgetary seriousness – and the rates of another country in the euro zone.
In fact, the spread between the Italian BTP and the German “Bund” climbed from 0.9 points in December 2021 to more than 2.4 points on June 15. Italy is now borrowing at more than 3.7% over ten years, compared to barely 0.5% at the start of 2021. During the debt crisis, at the end of 2011, this rate jumped to more than 7.5%. Ten-year French bonds are trading these days around 2.2%, against… 0% at the end of 2021.
This bond boom is fueled by galloping inflation – 8.1% in May in the euro zone – and the monetary tightening carried out by the major central banks, against a backdrop of concerns linked to the war in Ukraine and the disruption of the chains of supply. But it also reveals a sad reality: the risk of a fragmentation of the euro zone, ie of a divergence of financing conditions between the Member States, has not disappeared. It reflects the heterogeneity of the economies and the different exposures to Russia. However, this fragmentation can “deteriorating the transmission of monetary policy”, warns Isabelle Schnabel, member of the executive board of the European Central Bank (ECB), in a speech delivered on June 14, in Paris.
Let’s bet that, before long, the dusty rancor mixed with inglorious stereotypes will rebound, here and there, in the national media, as in each period of financial tensions: the countries of the North mock the idleness Mediterraneans, unable to reform fast enough; those of the South blame the obtuse frugality of the Nordics. In the aftermath, the Cassandres prophesying the decline of the monetary union, even its explosion resulting from the desire for emancipation of one of its members, will no doubt soon give voice again, too.
Taboos will fall
However, the euro zone is much stronger than ten years ago. It built the banking union; its banks have improved. During the pandemic, it launched joint loans and an unprecedented recovery plan of 750 billion euros. It is more united, a little less entangled in untenable budgetary rules. The ECB has learned the lesson of the debt crisis: to prevent speculation from unleashing on the weak links, it is necessary to communicate or act – which is often synonymous in monetary matters – quickly and without ambiguity. . Its previous president, Mario Draghi, demonstrated this in July 2012, when he put an end to the rise in sovereign rates by declaring that he would ” everything that’s necessary “ to save the euro.
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