Debt, Banking, Euro zone, Investing


While the sovereign debt crisis of the Euro zone raises numerous economic issues that are broadly discussed in public, it also involves a large number of legal questions that are, in contrast, rarely talked about. This is surprising, as the relevant legal implications may predetermine the outcome of the economic discussions by precluding certain options. The seventeen member states of the Euro zone and the European Central Bank are struggling to stabilize the financial situation of the currency union’s highly indebted members. Legal challenges result from the fact that the Euro zone is not identical to the European Union, which is comprised of ten more members than the Euro zone. Additionally, Euro zone members do not constitute an institution with legal competencies that would enable them to enforce emergency measures, as is the case with the European Union. Instead, the Euro zone’s only modus operandi is intergovernmental cooperation. However, the European Union’s legal framework draws limits on cooperation that could conflict with the rescue funds established by Euro zone members. Furthermore, the European Central Bank has gradually become the main provider of emergency assistance to indebted countries. It has enacted a number of non-standard measures whose volume has constantly been growing. Thus, the increasingly drastic nature of the European Central Bank’s actions raises the question of whether these emergency measures infringe upon the Bank’s own mandate. Finally, the restructuring of Greek sovereign debt in early 2012 has raised a number of legal issues. The focus of this analysis will be the legal challenges posed by retroactive Collective Action Clauses, in particular those presented by the Bilateral Investment Treaties that Greece has previously signed



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