12 Questions
What exorbitant privilege has Germany had due to its position within the eurozone?
Lower borrowing costs and a weaker currency
How has the euro been compared to the Deutschemark in terms of strength?
Much weaker
What will play the most significant role in determining the future of the eurozone?
Politics
What remains necessary to sustain the eurozone, according to the text?
Closer fiscal and banking arrangements
What did investors perceive about Spanish housing assets due to the perceived elimination of currency risk?
They were a great investment
What was the consequence of capital flows from large savers to capital importers in the Eurozone?
Led to a boom followed by a loss of long-term competitiveness
Why was a single currency believed to be needed following the devaluations of the early 1990s?
To prevent disparate trade shocks from recurring
What made Spanish housing assets an attractive investment according to the text?
Potential for high returns due to economic convergence from the euro
What is a key insight from the case of the eurozone regarding currency unions?
Currency unions can lead to self-reinforcing liquidity crises
What did the European Central Bank do in August to intervene in the eurozone crisis?
Became the central bank for both core and peripheral countries
Which country required dollars post-Lehman Brothers collapse due to firms borrowing in dollars that domestic savers could not fully supply?
South Korea
What role did the European Central Bank take on in relation to distressed peripheral countries?
Acted as a lender of last resort for those countries
Learn about the effects of weak economies in countries like Greece, Spain, and Portugal on the Eurozone, specifically Germany's lower borrowing costs and a weaker currency compared to the Deutschemark. Explore how this situation creates a unique advantage for Germany within the eurozone.
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