TYRVAINEN, TIMO April 0711

Sovereign Debt Crises in the Eurozone: Are we witnessing a prelude of a breakdown of the euro?

Timo Tyrväinen Chief Economist, Aktia Bank, Finland GIC ● Rome ● 7.4.2011 1

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How much more than states European large banks need to pay for external financing, %-points

Greece Ireland Portugal

Lehman subprime

6Source: Barclays Capital

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Can a country be dismissed from the EMU? What happends to a country which decides to leave euro?

- If it were an unstable economy like Greece, Ireland or Portugal?

- If it were a a stable economy like Germany or France?

If the ECB decides to hike rates, does it mean that it does not care about the weak economies?

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