1. 1 The Eurozone Crisis: Causes and Solutions Klaas Knot President, De Nederlandsche Bank Asia Society, Hongkong 15 October 2012

2. 2 The eurozone and the global economy

3. 3 European debt crisis

4. 4 Some convergence prior to the crisis... Cumulative growth differentials with Germany

5. 5 … but with borrowed money … Average annual growth rate of credit to private sector: 2000-2011

6. 6 … and accompanied by inflation… Cumulative differentials compared to EMU total : 2000-2007

7. 7 …reflecting wage developments

8. 8 Current account balance percent of GDP

9. 9 Governments went back to old habits Start EMU Budget deficits (% Gdp) Improvements in the run-up to EMU but relapse after admission

10. 10 “ On/off ” market discipline

11. 11 A stable design of EMU Strengthening growth potential and competitiveness Politically independent enforcement of the fiscal rules, guarding the debt ceiling of 60% European supervision, resolution and DGS Eurobonds as the capstone of EMU?