1. Economic crisis and potential impacts on the European security Petr Zahradník EU Office, Česká spořitelna Prague; 6 April, 2009

2. Crisis background: causes and features - Mortgage crisis in the USA - the end of US investment banking system (bankruptcy, inforced sale, change into the standard commercial banking status) - the environment of global economy: European entities engaged in those processes - Financial innovation - Globalization

3. Causes and features -Climate of low confidence among the US and European banks; inter-bank market operations visibly limited -Liquidity crisis – the worst: it can negatively influence even the relatively healthy banks and real economy entities; negative snow-ball effects

4. Causes and features -Excessive indebtedness and propensity to consume; -Generally, economic growth weakening and consequent recession; -Unemployment rate increase; -Monetary policy parameters softened; -Europe: exchange-rate depreciation (euro as well as the Czech crown; safe haven story over); -High level of economic openness seems to be rather disadvantage and handicap

5. Solutions and decisions -EU approach – four pillars -1. regulation and supervision -2. fiscal stimulus -3. structural changes -4. anti-protectionism -Confirmed in the Spring European Council as well as the G20 Summit

6. EU solution -Europe: composed of 27 sovereign states; national and Union concepts in parallel; „two-speed Europe“ risk; the need for compliance -The need of objective evaluation of the crisis

7. The risks regarding security -Radicalization -Fragmentation -Loss of confidence -Loss of the ability to govern -Protectionism (trade „wars“ leading to real wars) -Negative impacts of excessive fiscal stimulus

8. Thank you for your attention ! Petr Zahradník pzahradnik@csas.cz