The Eurozone Crisis: Overview and Issues for Congress

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Since 2009, the European Union has grappled with a sovereign debt and financial crisis that many consider the biggest current threat to the global economy. Analysts and investors are concerned that some Eurozone governments could default on their debt in a disorderly fashion; that vulnerabilities in the European banking sector could trigger broad financial turmoil; that the Eurozone could enter a protracted economic recession; and that one or more countries could leave the Eurozone. The economic crisis has also become a political crisis. A number of national governments have fallen as a direct or indirect result of the crisis, and the crisis has strained relations among European leaders and institutions.

The Obama Administration has repeatedly called for swift and robust European responses— specifically advocating that more substantial financial assistance be made available to struggling economies. The United States has found, however, that it has limited ability to affect European policy decisions on this issue. Some Members of Congress have expressed concern about the possible effects of the crisis on the U.S. economy, the appropriate role of the International Monetary Fund in the crisis, and the implications of the crisis for future U.S.-EU cooperation on foreign policy issues. Committees in both the House and the Senate have held hearings on the crisis and issues relating to its impact on the U.S. economy, and have exercised congressional oversight of U.S. policy responses.

This report provides a brief analysis of the Eurozone crisis and issues of particular congressional interest. For broader analysis of the origins of the Eurozone and its future prospects, see CRS Report R41411, The Future of the Eurozone and U.S. Interests, coordinated by Raymond J. Ahearn. For discussion about sovereign debt in advanced economies, including a comparison of the Eurozone and the United States, see CRS Report R41838, Sovereign Debt in Advanced Economies: Overview and Issues for Congress, by Rebecca M. Nelson.