The Financial Crisis: Impact on and Response by The European Union

The Congressional Research Service, a department of the Library of Congress, conducts research and analysis for Congress on a broad range of national and international policy issues. Some of the CRS work is carried out specifically for individual members of Congress or their staff and is confidential. However, there is also much CRS compiled material which is considered public but is not formally published on the CRS website.

For that reason a number of other organisations try to keep track of these publications and make them publicly available via their own websites. Currently, ESO uses the following websites to track these reports and allow access to them in ESO:

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Federation of American Scientists (FAS)

In some cases hyperlinks allows you to access all versions of a report, including the latest. Note that many reports are periodically updated.According to the most recent National Threat Assessment, the global financial crisis and its geopolitical implications pose the primary near-term security concern of the United States. Over the short run, both the EU and the United States are attempting to resolve the financial crisis while stimulating domestic demand to stem the economic downturn. These efforts have born little progress so far as the economic recession and the financial crisis have become reinforcing events, causing EU governments to forge policy responses to both crises. In addition, both the United States and the EU likely will confront the prospect of growing economic and political instability in Eastern Europe and elsewhere over the impact of the economic recession on restive populations. In the long run, the United States and the EU likely will search for a regulatory scheme that provides for greater stability while not inadvertently offering advantages to any one country or group. Throughout the crisis, the European Central Bank and other central banks have assumed a critical role as the primary institutions with the necessary political and economic clout to respond effectively. Within Europe, national governments, private firms, and international organizations have varied in their response to the financial crisis, reflecting differing views over the proper policy course to pursue and the unequal effects of the financial crisis and the economic downturn. Initially, some EU members preferred to address the crisis on a case-by-case basis. As the crisis has persisted, however, leaders have begun looking for a systemic approach that ultimately may affect the drive within Europe toward greater economic integration.

Within the United States, Congress has appropriated funds to help recapitalize financial institutions, and adopted several economic stimulus measures. In addition, Congress likely will be involved in efforts to reshape institutions and frameworks for international cooperation and coordination in financial markets. European governments are also adopting fiscal measures to stimulate their economies and wrestling with failing banks. The financial crisis has demonstrated that financial markets are highly interdependent and that extensive networks link financial markets across national borders, which is pressing EU governments to work together to find a mutually reinforcing solution. Unlike the United States, however, where the federal government can legislate policies that are consistent across all 50 States, the EU process gives each EU member a great deal of discretion to decide how they will regulate and supervise financial markets within their borders. The limits of this system may well be tested as the EU and others search for a regulatory framework that spans a broad number of national markets. Governments that have expended considerable resources utilizing fiscal and monetary policy tools to stabilize the financial system and to provided a boost to their economies may be required to be increasingly more inventive in providing yet more stimulus to their economies and face political unrest in domestic populations. Attention likely will also focus on those governments that are viewed as not expending economic resources commensurate with the size of their economies to stimulate economic growth.

• Primary Source

Federation of American Scientists (FAS): Congressional Research Service [CRS] Reports https://fas.org/sgp/crs/index.html

EveryCRSReport.com https://www.everycrsreport.com/

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