America 's Largest Currency Changeover Occurred

3683 Words Jul 3rd, 2015 15 Pages
Introduction:

On the first of January 2002, history 's largest currency changeover occurred. The changeover was a challenge of unseen proportions involving banking sectors, retailing companies and the overall public of the Eurozone. So how did this politically sound concept result in what can only be described as widespread economic turmoil? Of the member states, Portugal, Ireland, Italy, Greece, and Spain (PIIGS), have been the most condemned for their actions in the run-up to the crisis. Five years on, there are continued discussions of a possible exit of Greece from the Eurozone or 'Grexit, ' bringing into question the true stability of a single currency

For almost ten years leading up to the crisis, Greece and the PIIGS states boasted some of the fastest growing economies in the Eurozone. During this time, many Euro countries enjoyed interest rates lower than had ever been experienced in their economies. Due to the low interest rates that had come about from joining the Eurozone, many people used their newly found cheap money to invest in property. Similar to the housing bubbles that occurred in Spain and Ireland; the Greek population felt encouraged to purchase further housing, obtain second homes and invest in property. To further emphasise this unwarranted spending, Greece increased its public sector spending in an effort to boost the standard of living. This high level of economic activity exacerbated the crisis, as it left the PIIGS states susceptible to…
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