An old text from 2013, later published in the Journal of Macroecnomics 39 (2014) 250-259, about a reinterpretation of the European crisis. it has been read and quoted over the years. I debunk the view that fiscal policy was the culprit, and draw attention to the banking sectors of core and peripheral countries, responsible for financing
the credit boom that created the imbalances and vulnerabilities that later were at the centre
of the crisis. The increase of debt ratios in the periphery until 2007 was more significant for the private sector than for the public sector. The crisis has been as much a banking crisis as a sovereign debt crisis and to avoid similar future risks a European Supervisor and a Resolution
Authority are essential.