Political observers and European policy makers conventionally describe the economic crisis that engulfed many of the peripheral countries of the eurozone after 2009 as a sovereign debt crisis. The popular account of the crisis has been that of irresponsible fiscal policies in those countries—most importantly Greece, Ireland, Portugal and Spain. Consequently, policy prescriptions to address the crisis have focused on reducing government debt, primarily through austerity measures. In contrast to this prevailing perspective, I argue in this article that the eurozone crisis represents a balance-of-payments crisis rather than a sovereign debt crisis—only this time the crisis is taking place within a common currency. The common factor among the countries most severely affected by the euro crisis was not government debt. Actually, Greece was the only country with a sizable but stable government deficit and debt problem before the economic downturn started in 2007. Spain and Ireland even had budget surpluses before the crisis. Instead, the common denominator for Greece, Portugal, Spain, and Ireland was their deficit in the external payments position. Their national economies all had lost competitiveness in the eurozone.