{ "id": "R41167", "type": "CRS Report", "typeId": "REPORTS", "number": "R41167", "active": false, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 390023, "date": "2011-08-18", "retrieved": "2016-04-07T00:36:28.570444", "title": "Greece\u2019s Debt Crisis: Overview, Policy Responses, and Implications", "summary": "The Eurozone is facing a serious sovereign debt crisis. Several Eurozone member countries have high, potentially unsustainable levels of public debt. Three\u2014Greece, Ireland, and Portugal\u2014have borrowed money from other European countries and the International Monetary Fund (IMF) in order to avoid default. With the largest public debt and one of the largest budget deficits in the Eurozone, Greece is at the center of the crisis. The crisis is a continuing interest to Congress due to the strong economic and political ties between the United States and Europe.\nBuild-Up of Greece\u2019s Debt Crisis\nIn the 2000s, Greece had abundant access to cheap capital, fueled by flush capital markets and increased investor confidence after adopting the euro in 2001. Capital inflows were not used to increase the competitiveness of the economy, however, and European Union (EU) rules designed to limit the accumulation of public debt failed to do so. The global financial crisis of 2008-2009 strained public finances, and subsequent revelations about falsified statistical data drove up Greece\u2019s borrowing costs. By early 2010, Greece risked defaulting on its public debt.\nPolicy Responses with Limited Success\nEU, European Central Bank, and IMF officials agreed that an uncontrolled Greek default could trigger a major crisis. In May 2010, they announced a major financial assistance package for Greece, and the Greek government committed to far-reaching economic reforms. These measures prevented a default, but a year later, the economy was contracting sharply and again veered towards default. European leaders announced a second set of crisis response measures in July 2011. The new package calls for holders of Greek bonds to accept losses, as well as for more austerity and financial assistance. \nThese responses have prevented a disorderly Greek default, but the prospects for Greek recovery remain unclear. The economy is contracting more severely than expected, and, as a member of the Eurozone, Greece cannot depreciate its currency to spur export-led growth. Unemployment is close to 16%. \nAdditionally, the policy responses have not contained the crisis. Ireland and Portugal turned to the EU and IMF for financial assistance. In the summer of 2011, interest rates on Spanish and Italian bonds rose sharply.\nBroader Implications\nGreece\u2019s economy is small, but its crisis exposes the problems of a common currency combined with national fiscal policies. Additionally, its crisis set precedents for responding to crises in other Eurozone countries; highlighted concerns about the health of the European financial sector; created new financial liabilities for other Eurozone countries struggling debt; and sparked reforms to EU economic governance. It has also revealed tensions among EU member states about the desirability of closer integration.\nIssues for Congress\nImpact on the U.S. economy: U.S. exports to the EU could be impacted if the crisis slows growth in the EU and causes the euro to depreciate against the dollar. Through the first quarter of 2011, growth in the Eurozone was strong, but it may be starting to weaken. There has not been a clear depreciation of the euro against the dollar since the start of the crisis. As the crisis continues, increased perceptions of risk are impacting U.S. financial markets. If the crisis spreads in the Eurozone, the impact on the U.S. economy could be much greater.\nExposure of U.S. banks: U.S. banks have little direct exposure to Greece ($7.3 billion), but other potential exposures (derivative contracts, guarantees, and credit commitments) to Greece are much higher ($34.1 billion). U.S. banks are more heavily exposed to Spain and Italy, with direct and other potential exposures totaling nearly $450 billion.\nIMF involvement: Some Members of Congress are concerned about IMF involvement in the Greek crisis. In 2010, Congress passed legislation aimed at limiting IMF support for advanced economies (P.L. 111-203). In 2011, legislation was introduced in the House and the Senate to rescind some U.S. contributions to the IMF (H.R. 2313; S.Amdt. 501). The Senate voted down this legislation in June 2011.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R41167", "sha1": "67f6b6d940b17de1c94dee2a898c1835418bd5ca", "filename": "files/20110818_R41167_67f6b6d940b17de1c94dee2a898c1835418bd5ca.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R41167", "sha1": "1fceff4f53eaf3112208021b5abc05402a0458ab", "filename": "files/20110818_R41167_1fceff4f53eaf3112208021b5abc05402a0458ab.pdf", "images": null } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc501834/", "id": "R41167_2010May14", "date": "2010-05-14", "retrieved": "2015-03-30T22:03:27", "title": "Greece's Debt Crisis: Overview, Policy Responses, and Implications", "summary": "Greece is currently facing such a sovereign debt crisis. On May 2, 2010, the Eurozone members and International Monetary Fund (IMF) endorsed a historic \u20ac110 billion (about $145 billion) financial package for Greece in an effort to avoid a Greek default and to stem contagion of Greece's crisis to other European countries, particularly Portugal, Spain, Ireland, and Italy. This report provides an overview of the crisis; outlines the major causes of the crisis, focusing on both domestic and international factors; examines how Greece, the Eurozone members, and the IMF have responded to the crisis; and highlights the broader implications of Greece's debt crisis, including for the United States.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20100514_R41167_d8d15ae03a3e2c665e0b44665311d55f5964d193.pdf" }, { "format": "HTML", "filename": "files/20100514_R41167_d8d15ae03a3e2c665e0b44665311d55f5964d193.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "International finance", "name": "International finance" }, { "source": "LIV", "id": "International economic relations", "name": "International economic relations" }, { "source": "LIV", "id": "International affairs", "name": "International affairs" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc501901/", "id": "R41167_2010Apr27", "date": "2010-04-27", "retrieved": "2015-03-30T22:03:27", "title": "Greece's Debt Crisis: Overview, Policy Responses, and Implications", "summary": "This report provides an overview of the Greek debt crisis; outlines the major causes of the crisis, focusing on both domestic and international factors; examines how Greece, the Eurozone members, and the IMF have responded to the crisis; and highlights the broader implications of Greece's debt crisis, including for the United States.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20100427_R41167_058a0ccb8005af5f2bbf46ddc3a16facf7fb122b.pdf" }, { "format": "HTML", "filename": "files/20100427_R41167_058a0ccb8005af5f2bbf46ddc3a16facf7fb122b.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "International finance", "name": "International finance" }, { "source": "LIV", "id": "International economic relations", "name": "International economic relations" }, { "source": "LIV", "id": "International affairs", "name": "International affairs" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc501977/", "id": "R41167_2010Apr07", "date": "2010-04-07", "retrieved": "2015-03-30T22:03:27", "title": "Greece's Debt Crisis: Overview, Policy Responses, and Implications", "summary": "This report provides an overview of the Greek debt crisis; outlines the major causes of the crisis, focusing on both domestic and international factors; examines how Greece, the Eurozone members, and the IMF have responded to the crisis; and highlights the broader implications of Greece's debt crisis, including for the United States.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20100407_R41167_9334977f66d24b482ce0e2e0826e25231858c5dd.pdf" }, { "format": "HTML", "filename": "files/20100407_R41167_9334977f66d24b482ce0e2e0826e25231858c5dd.html" } ], "topics": [ { "source": "LIV", "id": "Finance", "name": "Finance" }, { "source": "LIV", "id": "International finance", "name": "International finance" }, { "source": "LIV", "id": "International economic relations", "name": "International economic relations" }, { "source": "LIV", "id": "International affairs", "name": "International affairs" } ] } ], "topics": [ "Economic Policy", "European Affairs", "Foreign Affairs", "Industry and Trade" ] }