Institutional Responses to the Eurozone Crisis

Institutional Responses to the 2015 Greek Financial Crisis

This paper evaluates the roles played by institutions – in particular, the European Central Bank and the European Stability Mechanism (ESM) – during the 2015 Greek financial crisis. The paper examines why the EU limited financial assistance to Greece following its payments default in June 2015, causing domestic bank closures and severe limitations on withdrawals from Greek banks. In July 2015, the Greek government applied for financial assistance from the ESM. The ESM proposed a memorandum of understanding outlining fiscal and administrative reform in Greece in return for an €86 billion bailout package. The paper also discusses how the impasse between the Greek government and the EU institutions was resolved with the new bailout package. The final section of the paper assesses the impact of the responses taken by the key EU institutions in managing the crisis.