Stuck in 2012: The hesitant geographies of European financial integration since the Eurozone crisis

Abstract

At the heart of the Eurozone crisis was a dramatic divergence in interest rates between member states and a reversal of previously booming cross-border credit expansion from ‘core’ to ‘periphery’ by European banks. The resulting crisis and retreat behind national borders across the Eurozone challenged European elites’ decade-long project of producing European scale as a space for financial accumulation. The Eurozone crisis has been well-described but post-crisis geographies of financial integration have received limited attention. We chart the financial positionality of member states and the relations between them in the period 2012–2019 using a variety of metrics including intra-Eurozone cross-border bank lending. The post-crisis period is dominated by the European Central Bank’s determination to do ‘whatever it takes’ to save the Euro and its financial system. The resulting asset purchases give it a qualitatively different place in the Eurozone financial system and end the crisis period’s retreat behind national borders. But they do not restore pre-crisis dynamics, and, in addition, unevenness along national lines remains. The crisis era core and peripheral labels still hold but the data also reveal important nuances: not least that the distribution of giant banks matters and offshore financial centres cut across core/periphery boundaries. Yet, even as there is no return to booming core-to-periphery credit, German lending into the Eurozone and its counterpart, Italian borrowing, symbolizes the continuing fragility of the Eurozone banking system. European Central Bank efforts ended the crisis, but more than asset purchases will be required if we are not to remain stuck in 2012.