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European economy: Are Europe's Debt Wars Religious? - by Leonid Bershidsky

French Economy Minister Emmanuel Macron says there's a "religious war" over debt going on in Europe, in which each country's dominant religious denomination determines the side it picks. Macron's remarks were lighthearted, but they're also grounded in historical fact.

Speaking at a conference of German diplomats on Tuesday, Augusr 25 Macron said the war he was describing pitted a "Calvinist" view of debt, against a "Catholic" one. Under the former, puritanical approach, countries that "didn't respect their commitments" had to pay "till the end of their life," he said. For Catholics: "We failed, but we go to church, we explain the situation and we can start another week the day after."

In a 2002 paper, Rene Stulz and Rohan Williamson established that traditionally Catholic countries -- from Austria to Argentina -- afford weaker protection to creditors than do Protestant ones, such as the Nordic nations.

The Catholic cultures are also worse at enforcing creditor rights. This holds regardless of a country's legal system type -- common or civil law -- or wealth level. Stulz and Williamson trace that to the prohibition of usury in the medieval (pre-Protestant) church, which aimed to protect the weak from the strong:

Read more: Are Europe's Debt Wars Religious? - Bloomberg View

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