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Volume 54, March/April 2019, Number 2 · pp. 78-84

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Domesticating the Euro

Lorenzo Bini Smaghi, Michala Marcussen

When the collapse of Lehman Brothers in September 2008 sent shockwaves through global financial markets, the euro behaved like a safe haven currency, reflecting the credibility of the price stability target and the strength of the ECB as an institution. However, in the absence of a lender of last resort to the sovereign and a banking union, cracks soon appeared, triggering a costly crisis that saw the euro area periphery behave like an emerging market.

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