The Greek Debt Crisis: Overview and Implications for the United States

Summary

Congressional Research Service

7-5700

www.crs.gov

R44155

Summary

Crisis Overview

Greece’s economy has been in crisis since 2009. While concerns have focused on the sustainability of the government’s debt, the crisis has also resulted in a general collapse of the Greek economy. Greece’s debt level has increased from 103% of GDP to over 170% of GDP, its economy has contracted by 25%, unemployment has tripled to 25%, and the Greek banking system has become increasingly unstable. Although other Eurozone governments, the International Monetary Fund (IMF), and the European Central Bank (ECB) have taken a number of policy measures to contain the crisis, Greece continues to face serious economic challenges.

The economic crisis in Greece has also evolved into a broader political crisis in Europe that many analysts believe could represent the most significant setback in over 60 years of European integration. Analysts argue that the acrimonious debates among European leaders about the appropriate crisis response have heightened political tensions (especially between Germany and France) to a degree that could negatively impact the EU over the longer term. In particular, the crisis in Greece has exposed problems with the institutional architecture of the Eurozone, whose member states share a common currency and monetary policy, but retain national control over fiscal and banking policies.

Recent Developments and Outlook

Between mid-2014 and mid-2015, the Greek government was in a stalemate with other Eurozone governments and the IMF over disbursements of previously committed financial assistance. The Greek government wanted more flexibility on reforms and debt relief from European creditors. Meanwhile, European creditors, led by Germany, expressed frustration with Greece’s repeated delays in implementing reforms and demanded further austerity measures. Elections in January 2015 of a new, far-left, anti-austerity Greek government heightened tensions considerably.

In late June 2015, the stalemate reached a critical point, as the Greek government was running out of cash. The Greek government closed the banks, imposed capital controls, and missed a payment to the IMF. In a July 5 referendum, more than 60% of Greek voters rejected reforms demanded by other Eurozone governments and the IMF. There was speculation that Greece might leave the Eurozone. On July 12, Eurozone heads of government reached an agreement to begin negotiating a third financial assistance package to Greece in exchange for reforms by the Greek government, while affirming Greece’s membership in the Eurozone. The July agreement helped stabilize the economic situation in Greece in the short term, and paved the way for a bridge loan that Greece used to make overdue payments to the IMF.

Agreement on the terms of third package was reached in August. The Eurozone rescue facility will provide up to 86 billion (about $94 billion) to Greece over the next three years. The IMF has not made a financial commitment to the third program, and it is calling for debt relief for Greece. Longer-term, there is debate about whether the new program will resolve the crisis, allow Europe to continue “muddling through” the crisis, or ultimately result in a Greek exit from the Eurozone.

Issues for Congress

Impact on the U.S. Economy: Although direct U.S. exposure to Greece is limited, Europe as a whole is a major economic partner of the United States. Continuing uncertainty in Europe could threaten its financial stability and cause the dollar to strengthen, making U.S. exports less competitive.

IMF Involvement: Some analysts have been skeptical of IMF involvement in Greece, including extending large loans to a developed economy with unsustainable debt. Other analysts have argued that IMF financial assistance helped stem contagion of the crisis and ensure stability in the global economy.

U.S.-European Cooperation: The United States looks to Europe for partnership in addressing a range of global challenges. Political tensions in Europe and a focus on the Greek crisis could prevent the EU from focusing more intently on other key U.S.-European policy priorities, such as cooperation on Russia sanctions and concluding negotiations on the proposed Transatlantic Trade and Investment Partnership (T-TIP).

Contents

Introduction 1

Overview of the Crisis 2

Build-up and Outbreak of the Crisis 2

Recent Developments 5

Agreement on a Third Package 5

Prospects for the Third Package 7

Economic Outlook for Greece and the Eurozone 8

Political Dynamics in Europe 9

Dynamics in Greece 9

Dynamics in the EU 10

Political Outlook for Europe 11

Implications for the United States 11

Implications for the U.S. Economy 12

Implications for U.S. Participation in the IMF 15

Implications for U.S.-European Cooperation 16

Figures

Figure 1. Yields on 10-Year Greek Bonds 3

Figure 2. Greece’s Outstanding Debt 13

Figure 3. Foreign (Non-Greek) Bank Exposure to Greece 14

Contacts

Author Contact Information 17

Introduction

Since 2009, Greece has been grappling with a major economic crisis. The crisis has been rooted in concerns about the sustainability of Greece’s public finances and high debt levels, but it has had broader effects on Greece’s economy, including a collapse in economic growth, high unemployment, and instability in the country’s banking system. Although the Greek economy is small, accounting for less than 2% of Eurozone gross domestic product (GDP), many policymakers and analysts are concerned about the potential contagion of the crisis in Greece to the rest of the Eurozone and the global economy. More fundamentally, the crisis has exposed problems with the institutional architecture of the Eurozone, whose member states share a common currency and monetary policy, but retain national control over fiscal and banking policies.

What started and continues as an economic crisis in Greece has also evolved into a broader political crisis in Europe that many analysts believe could represent the most significant setback in over 60 years of European integration. In Greece and other European countries with struggling economies, public opposition to economic reforms widely viewed as unjustly imposed by other governments and institutions has fueled political instability and growing concerns about the democratic legitimacy of European institutions. Greece has had five different governments since 2009. Likewise, governments in more prosperous economies, such as Germany’s, have faced mounting pressure to end financial assistance to what many voters perceive as profligate governments. Analysts argue that the resulting, fraught debates among European leaders about the appropriate crisis response have heightened political tensions to a degree that could negatively affect the EU over the longer term. Many have been particularly alarmed by the frictions between Germany and France, long regarded as the key proponents and drivers of the European integration project.

Some Members of Congress have expressed concern about the possible effects of the crisis in Greece on the United States. Although the direct financial exposure of the United States to Greece is limited, there are concerns about possible contagion that could be sparked by a further deterioration of the crisis and implications for the U.S. dollar. The role of the International Monetary Fund (IMF) in the crisis has also been controversial and, as the United States is the largest shareholder at the IMF, some Members have raised questions about oversight of U.S. policy at the IMF. Some Members have also raised the impact the Greek crisis has already and could increasingly have to constrain Europe’s effectiveness as a partner for the United States, including on issues such as managing a resurgent Russia and the ongoing conflict in Ukraine. Committees in both the House and the Senate have held hearings on the crisis and issues relating to its impact on the United States, and have exercised congressional oversight of U.S. policy responses.

This report provides a brief overview of the crisis, including developments through July 2015 when questions about Greece’s future in the Eurozone resurfaced and emergency negotiations resulted in a third financial assistance program for Greece. It also discusses potential implications of the crisis for the U.S. economy and U.S.-European cooperation on broader strategic and economic cooperation.

Overview of the Crisis

Build-up and Outbreak of the Crisis

As Greece prepared during the 1990s to adopt the euro as its national currency, its borrowing costs dropped dramatically (Figure 1). Investors were confident that the Eurozone, with eligibility requirements, a common monetary policy managed conservatively by the European Central Bank (ECB), and rules limiting deficits and debt, would bolster traditionally weaker economies, such as Greece. The Greek government took advantage of lower borrowing costs, with government debt rising from 68% of GDP in 1990 to over 100% of GDP in 2006. However, the influx of capital to Greece and lax enforcement of rules related to public finances did not result in a fundamental change in how the Greek economy was managed or in investments that increased the competitiveness of the economy. Instead, Greek governments used borrowed funds from private investors to pay for government spending and to offset low tax revenue, consistently running budget deficits through the 1990s and 2000s.

Greece’s crisis was triggered in late 2009, when a newly-elected Greek government revealed that its predecessors had been underreporting government budget deficits. Questions about the sustainability of Greek public finances eroded investor confidence and shut the country out of financial markets, when Greece, like many other countries, was using expansionary fiscal policies to recover from the global financial crisis of 2008-2009. Without access to capital markets, uncertainty increased about whether Greece would be able to repay its debt. Investors also started taking a more critical look at the sustainability of public finances in other Eurozone countries, with the crisis eventually spreading to Ireland, Portugal, and Cyprus. There were also questions about possible contagion to Italy and Spain, the third and fourth largest economies in the Eurozone (after Germany and France). More broadly, the debt problems in such countries posed a threat to the European banking system, slowed economic growth, and contributed to increased unemployment in many European countries.

Figure 1. Yields on 10-Year Greek Bonds

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Source: Global Financial Data.

Concerned about the systemic risks Greece could pose to the rest of the Eurozone and the broader international economy, other Eurozone governments and the IMF extended two financial assistance packages to the Greek government (in 2010 and 2012) totaling 240 billion (at current exchange rates, about $263 billion). Financial assistance was disbursed in phases, contingent upon fiscal and structural reforms, which have been implemented to varying degrees. In particular, the Greek government has implemented a significant fiscal adjustment, shifting from a primary budget deficit (the deficit excluding debt payments) of 9.9% of GDP in 2009 to a primary budget surplus of 1.5% in 2014. However, concerns have been raised about the pace of structural reforms and privatization (for more information, see text box, “To What Extent has Greece Implemented Reforms?”) Additionally, in 2012, Greece restructured debt held by private investors, with private investors taking substantial losses (about 75% on a net present value basis).

The ECB also took a number of actions to respond to the crisis in Greece and the broader Eurozone, including purchasing or pledging to purchase bonds in secondary markets (initially through the Securities Market Program [SMP] and later the Outright Monetary Transactions program [OMT]). It also injected more than 1 trillion (about $1.1 trillion) in low-cost, three-year loans (long-term refinancing operations, or LTROs) into more than 800 banks across the Eurozone. The ECB cut interest rates to record lows, and in March 2015, launched a new round of quantitative easing to help stimulate the Eurozone economy. The ECB’s actions have been broadly credited with containing the Eurozone crisis and stabilizing Eurozone financial markets.

Over the five years since the onset of the crisis, Greece’s debt exposed and exacerbated problems in its banking sector and resulted in a collapse of the economy. Since 2007, Greece’s economy has contracted by nearly 25%, a contraction some analysts believe is worse in relative terms than the Great Depression in the United States. Unemployment has tripled to nearly 25% (above 50% for young people), and public debt has risen from 103% of GDP to over 170% of GDP, most of which is now owed to other Eurozone governments and institutions. In comparison, other countries in the Eurozone that experienced similar pressures are faring better. Ireland and Portugal, countries that also turned to the Eurozone and IMF for financial assistance, successfully concluded their programs, have returned to capital markets, and are in the process of repaying the IMF early.

To What Extent Has Greece Implemented Reforms?

A key source of debate is the extent to which the Greek government has implemented fiscal and structural reforms. On the fiscal side, there has been a substantial adjustment. In terms of the primary budget balance (government revenue minus expenditures, excluding debt repayments), the government has shifted from a deficit of 9.9% of GDP in 2009 to a surplus of 1.5% of GDP in 2014. However, in mid-June, the IMF raised concerns about the need for comprehensive reform of Greece’s value added tax (VAT) and pension systems. Analysts have expressed similar concerns about the VAT, including the need for a broader base and higher rates, among other issues. While Greece passed major pension reforms in 2010 and 2012 which increased the retirement age and cut pension benefits, expenditures on pensions still account for over 16% of Greece’s GDP, high among European countries. Some argue that additional reforms are needed, because older workers have largely been sheltered from reforms, Greece has a rapidly aging population, and the baseline for pension benefits was much more generous than those provided by other European countries. Some experts have also noted the slow pace of privatization in Greece, which could help the government raise badly needed funds. Tax evasion also remains problematic in Greece, with some analysts suggesting that it costs the government between 10 billion (about $11 billion) and 20 billion (about $22 billion) annually in tax revenues.

There is also debate over the progress on structural reforms (reforms to make the economy more competitive). On one hand, successive Greek governments have made substantial progress as measured by the World Bank Group’s Doing Business report, which compares business regulations and the protection of property rights across countries. Greece’s ranking has improved dramatically, from #106 in the world in 2008 to #61 in 2014. In 2013, it was also named as one of the “top reformers” worldwide. Additionally, labor costs in Greece have also fallen by 15%-20% between 2010 and 2014, which lowers the cost of production and improves Greece’s competitiveness.

However, many analysts have expressed concerns that substantial additional reforms are needed. For example, in the Doing Business report, even with the reforms, Greece is now ranked just ahead of Russia (#62) and just below Tunisia (#60), far from most of its European peers (for example, Ireland is ranked #13 and Portugal #33). In 2013, the OECD conducted an 11-month investigation in cooperation with the Greek authorities into Greece’s food processing, retail trade, building materials, and tourism sectors. As a result of their research, they found 555 “problematic” regulations and 329 provisions where changes could be made to foster competition. Broad recommendations included repealing obsolete and outdated legislation, abolishing barriers to entry, and abolishing requirements to seek approval on prices from the government or industry associations. Other recommendations were more specific, such as lifting the five-day restrictions on the shelf life of milk, liberalizing prices of over-the-counter medicines, and lifting the restriction that round-trip cruise ships from Greece must embark and disembark from the same port.

More generally, the OECD found that, “Despite recent reforms, Greek product markets remain among the most strictly regulated in the OECD area, hindering competition and preventing the price adjustments needed to support the recovery. This lack of competition is holding back the growth of productivity by limiting the entry and expansion of more productive and efficient firms, inhibiting foreign investment, and holding back innovation.” Such reforms, however, could be politically and culturally difficult to implement.

Recent Developments

Between mid-2014 and mid-2015, the second financial assistance program for Greece was derailed by a stalemate between the government and its Eurozone and IMF creditors. Key disagreements included the economic reforms tied to the disbursement of committed funds, particularly relating to taxes, pensions, and fiscal targets, and potential debt relief from other Eurozone governments in light of its unsustainable debt level and growing public dissatisfaction with austerity; many Greeks. The Greek government has asked for more flexibility on reforms and debt relief from European creditors in light of its unsustainable debt burden and growing public dissatisfaction with austerity; many Greeks viewed the demands of its creditors as humiliating and pointed out that most of the previous bail-out money went to repay debts, primarily to French and German banks, and not help the Greek economy. Meanwhile, European creditors, led by Germany, have expressed frustration with Greece’s repeated delays in implementing reforms and what is viewed as Greece’s lack of regard for abiding by the “rules” of the Eurozone.

Elections in January 2015 of a new, far-left, anti-austerity Greek government heightened tensions considerably. In June 2015, the stalemate between Greece and its creditors reached a critical point. The Greek government was running out of cash and resorting to exceptional measures to make debt repayments and cover obligations like paying pensioners and government salaries. On June 26, the Greek government called for a public referendum on reforms required by its creditors in order to unlock a final disbursement of 7.2 billion (about $7.9 billion) committed as part of its second financial assistance package. Concerns that Greece could leave the Eurozone accelerated a run on Greek banks, and on June 28, the government imposed capital controls, closed Greek banks, and limited ATM withdrawals. On June 30, the Greek government did not make a 1.5 billion (about $1.6 billion) payment to the IMF, becoming the first advanced country to fall into arrears with the IMF and the single biggest missed payment in the IMF’s 60-year history. On July 5, voters in the referendum rejected the creditors’ proposal, with more than 60% of voters voting “no.”

Agreement on a Third Package

Between early- and mid-July, the Greek government, other Eurozone countries, and the IMF negotiated a path forward. A number of possible options were discussed. Broadly speaking, they fell into three major categories: (1) extend a third financial assistance package and require additional reforms in Greece, while keeping Greece in the Eurozone; (2) have Greece exit the Eurozone, either through a unilateral decision by the Greek government or a negotiated temporary suspension; or (3) keep Greece in the Eurozone, but provide more flexibility to the Greek government in terms of debt relief and reforms (see textbox, “Options for Greece: What was Considered?” for more information).

Ultimately, on July 12, 2015, an agreement was reached by Eurozone heads of government to advance with essentially the first option outlined above: keep Greece in the Eurozone and provide a third financial assistance package to Greece, with no concrete debt relief at this time, although it may be possible in the future. The agreement in July was for a broad framework and key details have been negotiated in following weeks, including on the details of the third financial assistance package. Key provisions of July agreement include:

A third financial assistance package. The July agreement laid out a framework for providing a third financial assistance package for Greece. Over the following month, Eurozone governments negotiated the details of the third package, which was finalized in August. They agreed to provide up to 86 billion (about $94 billion) in new financial assistance to Greece over the next three years, with financing coming from the Eurozone’s main rescue facility (the European Stability Mechanism, or ESM). Unlike the previous two programs for Greece, the IMF is not contributing financing at this time.

Wide-ranging reforms. The Greek government implemented a number of reforms in the short term and committed to a number of reforms over the longer term. Reforms target a range of issues, including taxes, pensions, statistical reporting, the judicial system, market liberalization (such as Sunday sales and reforming pharmacy ownership and bakery regulations), privatizing the energy market, reforming collective bargaining, addressing banking sector weaknesses, and “de-politicizing” the public administration, among others. Several specific reforms needed to be passed by the Greek parliament in July to proceed with negotiations, which it did.

Transfer 50 billion (about $55 billion) in Greek assets to a new fund. The new fund would oversee the sell-off of Greek assets, such as airplanes, airports, infrastructure, and government stakes in Greek banks and utility and electric companies, using the proceeds to recapitalize banks, pay off existing debt, and invest in the Greek economy. The fund is to be managed by Greek authorities under the supervision of relevant European institutions.

Possibility of future debt relief. The agreement says that Eurozone countries “stand ready to consider, if necessary, possible additional measures (longer grace and payment periods)” to put Greece’s debt on a sustainable path.

EU investments of 35 billion (about $38 billion) in Greece. The European Commission is to work with the Greek government to mobilize up to 35 billion (about $38 billion) under various EU programs to invest in Greece over the next three to five years.

Options for Greece: What was Considered?

In July 2015, many different policy options were discussed and negotiated for responding to crisis in Greece. Broadly speaking, they fell into three major categories:

Option 1: Greece stays in the Eurozone, and a third financial assistance package is extended to Greece. The program would require the government to implement reforms, including a number of reforms before the program could go forward. In a position paper outlined by German Finance Minister Wolfgang Schäuble, he also suggested (controversially) that the program should require the transfer of 50 billion (about $55 billion) in Greek assets to an external fund, to be sold off (privatized) over time and pay down debt. This is essentially the option agreed to by Eurozone heads of government in mid-July.

This option was attractive because it would keep Greece in the Eurozone, and most economists agree that a Greek exit from the Eurozone would have disastrous short-term effects on the Greek economy. Continued Greek membership in the Eurozone would also limit possible contagion to other Eurozone countries and the broader international economy, by maintaining the credibility of the Eurozone as an irrevocable currency union. It would also require the Greek government to implement reforms to make its economy more competitive. However, many analysts raised concerns, because similar programs over the past five years have not resolved the crisis. New loans to Greece would likely cause its debt level, already unsustainable, to rise further, and these new loans would be used to repay existing debts, primarily to other Eurozone governments and institutions, rather than directly invest in or support the Greek economy. Additional fiscal cuts when Greece’s economy is already in a deep recession could make it difficult for the economy to grow. Some of the required reforms, including the transfer of state assets to a fund overseen by European authorities, could undermine Greek sovereignty.

Option 2: Greece exits the Eurozone (“Grexit”). There were a number of different proposals about how this could be accomplished. For example, in his position paper, German Finance Minister Wolfgang Schäuble suggested that Greece could be temporarily suspended from the Eurozone for a five-year period, with possible debt restructuring by Eurozone governments and support of Greece through humanitarian and technical assistance. There was also speculation in Greece that it could unilaterally decide to exit the Eurozone. There was talk about a “soft” Grexit (Greece issues “IOUs,” which circulate as a parallel currency with the euro) or a “hard” Grexit (Greece passes a law to introduce a new national currency and redenominates all bank deposits in the new currency). The Greek Finance Minister at the time, Yanis Varoufakis (who has since resigned), was reportedly working on a “secret” plan to develop a parallel payment system, in the event that Greece chose to exit or was pushed out of the Eurozone.

One of the main benefits to a new national Greek currency is that, in the longer term, it could help boost Greek exports and boost export-led growth. “Grexit” would also break a five-year cycle of financial assistance packages for Greece, which have increased Greece’s debt burden and, some argued, have not translated into real structural reforms in the economy. If Grexit was accompanied by debt restructuring by Eurozone governments, it could provide the government with more flexibility in its fiscal policy. However, it’s not clear how, technically, a Greek exit would be implemented; there are no provisions for a country leaving the Eurozone. Moreover, most economists agree that a Greek exit from the Eurozone would be extremely disruptive to Greece’s economy in the short-term, for example by wiping out citizens’ life savings, causing banks to fail, and making the purchase of even basic goods, like food, difficult. If Eurozone governments and institutions did not restructure Greek debt, Greece would likely default on their loans. In either case, they would likely face losses on their loans to the Greek government. Longer-term, the Greek government could have trouble containing inflation of the new currency. Some experts also worried that “Grexit” could harm the credibility not only of the Eurozone (which was meant to be irreversible), but also of the entire EU project.

Option 3: Greece stays in the Eurozone, but the Greek government is provided more flexibility. To some observers, the proposals offered to date ignore the most pressing issue facing Greece and the EU as a whole: the high rate of unemployment. As a result, they have suggested that a more effective policy would include a combination of significant debt relief and a relaxation or suspension of budget rules to allow for a coordinated EU-wide fiscal stimulus, while still requiring structural reforms. For example, the IMF and Treasury Secretary Jack Lew became more vocal in the need for debt relief for Greece in late June and early July.

Keeping Greece in the Eurozone with more flexibility would prevent the adverse economic consequences of Greece leaving the Eurozone, while also addressing Greece’s unsustainable debt burden and high rate of unemployment. Debt relief could allow more expansionary fiscal policies in Greece and in the EU, which could help revive economic growth. If debt relief was tied to the implementation of economic reforms, it could continue to provide motivation for the reform agenda. However, by extending debt relief to Greece, other Eurozone governments would have to face losses on their loans to Greece, which could be politically difficult. Some argue that debt relief for Greece would violate EU law and a fiscal stimulus potentially could violate newly revamped EU fiscal rules. Also, some Europeans are concerned that providing debt relief to Greece could create “moral hazard” in the Eurozone – bailing out one country might mean that other countries would be less inclined to implement prudent policies in the future.

Prospects for the Third Package

In the short term, the July 2015 agreement helped stabilize the economic situation in Greece. It paved the way for a 7 billion (about $7.7 billion) bridge loan that Greece used to clear arrears with the IMF and make payments to the ECB. After the deal was outlined, the ECB also increased emergency liquidity assistance for Greek banks. The Greek government was able to partially reopen banks on July 20.

However, negotiations over the third financial assistance program were contentious. In June and July 2015, the IMF became more forceful in its assessment that Greece’s debt is unsustainable and that debt relief is needed “far beyond what Europe has been willing to consider so far.” At the end of July, the IMF announced it could not participate in the third package at this time, even though its participation was formally requested by the Greek government and IMF involvement is strongly preferred by the Europeans. The IMF has said that it will consider participating after Greece has agreed on a comprehensive set of reforms and Eurozone governments have agreed on debt relief. The agreement reached in August for the third program for Greece will be funded solely through Eurozone financing, whereas the previous two programs were funded jointly by other Eurozone governments and the IMF.

Analysts have raised a number of questions about July 2015 agreement, such as how much money will be raised from the new privatization fund, whether the Greek government will commit to a reform agenda that is acceptable to its Eurozone counterparts, and whether calls for debt relief for Greece will gain traction with other Eurozone governments. More broadly, some analysts have questioned whether a third program for Greece would be successful, or whether it merely repeats previous policy responses that have been unsuccessful. There is debate about whether the new program will: (1) resolve the crisis; (2) allow Europe to continue “muddling through” the crisis; or (3) still ultimately result in a Greek exit from the Eurozone (“Grexit”).

Economic Outlook for Greece and the Eurozone

The ongoing debt crisis in Greece has exposed significant fault lines in the conduct of economic policy and in the economic performance of Eurozone members. Although members of the Eurozone have experienced different levels of economic performance since the currency union’s founding, the financial crisis and associated economic recession have widened the gap in economic performance among the Eurozone’s members: for the Eurozone as a whole, real GDP is below pre-crisis levels and is projected by the IMF to remain around an annual rate of 1.5% for the near term. In addition, Eurozone members face a challenging set of issues: (1) there are double-digit unemployment rates across the Eurozone as a whole and interest rates are close to zero; (2) persistently low rates of inflation raise the risk of economic stagnation; (3) business investment, a key factor in future economic growth, registers few signs of life; and (4) productivity and competitiveness gains have nearly disappeared.

The IMF also estimates that European banks have high levels of debt and 900 billion ($1 trillion) in nonperforming loans, with the majority of these loans concentrated in six of the Eurozone countries. Such nonperforming loans limit the ability of Eurozone banks to provide credit and, therefore, act to reduce the effectiveness of quantitative easing and to restrain economic growth. Due to concerns over the EU’s financial and economic health, the ECB began in late 2014 to tighten the rules defining capital and to notify the largest Eurozone ba