A tale of two crises Broadly speaking, the euro area crisis has consisted of two separate crises – a sovereigninduced crisis and a banking-induced crisis. The sovereign-induced crisis is mainly what happened in Greece.
The initial tremors of the euro area crisis occurred in Greece in the fall of 2009 following news that the country’s fiscal deficit would be much higher than had been expected by the markets. The country suddenly found itself at the centre of a sovereign debt storm, and interest-rate spreads began a relentless upward climb.