Crisis Creates Testing Times for Europe’s Policymakers

The June 2009 issue of the IMF’s quarterly magazine Finance & Development looks at the harsh toll of the global economic crisis on both Europe’s advanced and emerging economies because of the global nature of the shocks that have hit both the financial sector and the real economy.

Key articles include:

Europe Under Stress by Marek Belka
The integration of Europe’s economies has been a tremendous success story. This success could now be at risk. The trick is to manage the crisis, preserve the progress that has been made, and revamp Europe’s frameworks and reform agenda.

Losing Their Halo by Martin Čihák and Srobona Mitra
The new central and eastern European members of the European Union had it very good for a while. But the good times didn’t last. The new member states’ initial resilience to the global financial turmoil has given way to deep crisis in a few of them.

A Tale of Two Crises by Erik Berglöf, Alexander Plekhanov, and Alan Rousso
Russia has not done enough to inoculate itself from recurring crises that stem, in large part, from a sharp drop in the price of oil.

Stress Test for the Euro by Barry Eichengreen
The ongoing credit crisis has given rise to chatter and speculation about the possibility that one or more euro area countries might now choose to abandon the euro. This article weighs the implications of such a move and concludes that it is not inconceivable.

The Euro’s Finest Hour?
Charles Wyplosz
The financial—and now economic—crisis has presented the euro area with a large number of varied tests. But one thing these countries don’t need to worry about is their currencies, because they don’t have any. The euro works and that is no mean feat.