ABSTRACT
With the introduction of the euro, the nominal exchange rates of the countries had been fixed, interest rates harmonised, and the scope for increases in government indebtedness limited. These were the three main technical features of the introduction of the euro. All three play a major role in the economic analysis of the Eurozone from 1999 to 2014. In the following, a panorama is developed using data from Germany, Greece, Ireland and Spain. We’ll start with the standardisation of interest rates. Figure 11.1 shows the interest rates (in per cent) of three ECB facilities: marginal lending, main refinancing and deposits. Banks operating in the Eurozone can borrow reserves against collateral from the first two of these facilities. They can also borrow in the interbank market. In order to do so, they must offer an interest rate that lies above the deposit rate.
