Was the Eurozone crisis primarily a government debt, banking, or currency crisis?

Question 1

Was the Eurozone crisis primarily a government debt, banking, or currency crisis?

Answer 1

• Government debt crisis (primary
  element) -
  o Sovereign Debt Overhang - unsustainable public debt so raised fears of default
  o Deficits and Austerity - exposed large budget deficits and debts - caused loss of confidence
  o Bailouts and Conditionality - austerity measures from IMF worsened economic conditions
• Banking crisis (secondary element) -
  o Bank exposure to sovereign debt - value of bonds in European banks dropped, and raised fears of a banking crisis
  o Liquidity Crisis - due to investors pulling their funds
  o Bank Failures and Rescues - require bailouts
• Currency crisis (secondary element) -
  o Inability to devalue - due to sharing the euro
  o Confidence in Euro - concerns created volatility
  o ECB Interventions - slow as a LOLR so made crisis worse