The ensuing global financial crisis gave rise to the great recession, which affected European countries disproportionately due to their high degree of openness. •  The even more serious third stage came in May 2010 when the euro area sovereign debt crisis erupted in Greece and spread to other countries. What happened?
After the launch of the euro, various cracks in the currency edifice emerged. Public finances were weak in several euro area countries; macro imbalances were  1  For a chronology of the crisis see also Drudi, Durre and Mongelli (2012) “The interplay of economic reforms and monetary policy: the case of the euro area”, ECB Working Paper No.