9. The causes of the European banking and sovereign debt crisis included (a) The creation of the "euro" monetary union was not accompanied by a banking union and banks started operating as regional banks while their safety was guaranteed by national governments. (b) The European Central Bank was not given adequate powers to act as a real central bank. (c) The rules constraining fiscal policy budget deficits became ineffective after the governments of the two largest economies in the euro zone violated the rules. (d) All the above. (e) Only (a) and (b) are true.

The objective of the question is to identify the causes of the European banking and sovereign debt…

Answered: 9. The causes of the European banking…

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9. The causes of the European banking and sovereign debt crisis included

		(a) The creation of the "euro" monetary union was not accompanied by a banking union and banks started operating as regional banks while their safety was guaranteed by national governments.
		(b) The European Central Bank was not given adequate powers to act as a real central bank.
		(c) The rules constraining fiscal policy budget deficits became ineffective after the governments of the two largest economies in the euro zone violated the rules.
		(d) All the above.
		(e) Only (a) and (b) are true.