In this paper the authors analyze how macroeconomic imbalances within
the Eurozone, primarily the current account deficits of peripheral countries and the surpluses of central countries, have contributed to deteriorate the development perspectives of the former, thus compromising the financial position of their private sector which then translated into the sovereign debt crisis. These events were further amplified by the institutional shortcomings of the European Economic and Monetary Union. In addition, fiscal policies implemented in all countries affected by the sovereign debt crisis, aimed at restoring market confidence, triggered a downward spiral that made even more uncertain their economic recovery and further compromised the ability of banks to extend credit to firms. This phenomenon had particularly negative effects on the production of the weakest areas.