If policymakers react properly, this can boost consumer, business and investor confidence – and the current crisis is, to a large extent, also a crisis of confidence. If, on the other hand, there is a lack of political action, the volatility will spread to more and more countries.
The decisions made at the EU and at the euro summits in October were important steps towards containing the crisis and preventing the occurrence of future crises. The key elements were the agreement on voluntary restructuring of Greece’s sovereign debt, the recapitalisation of the banking sector and the barriers to prevent the sovereign debt crisis from spreading.