The Current Financial Crisis and State Aid in the Eu

"In this paper I will address, within the context of the EU, the need for state aid to the financial sector and the rest of the economy. I will look at the rationale for state intervention and state aid, and the way that the European Commission has responded to the measures taken by Member States. Overall, the Commission has responded quickly and with the right approach. Then I will analyse the menu of measures currently being used using an economics-based approach. The ranking of the measures shows that most of the governments in the EU have responded with the right measures. However, with the experience of past crisis, I consider that the menu has to be expanded, and the second wave and further cycles of the crisis may warrant the expansion of the measures used so far. The last section takes this issue further and considers whether more bold and unorthodox measures may be required if the crisis continues to deepen in order to jump-start the economy. This requires a revision and expansion of the guidelines issued by the Commission and a more coordinated approach with other institutions, mainly the ECB and regulatory bodies."