Elementary Facts Should Not Be Forgotten

These changes will in turn make companies more competitive, expand markets for businesses, as well as increase trade across borders. However, most importantly the euro is intended to create financial market stability within the participating countries. By eliminating the movements of exchange rate and all reference to them, the European Central Bank will control interest rates and inflation. This will lead to less uncertainty and create new opportunities for success.

These countries are now facing great recessions and austerity as a result of these debts. Because Italy, Belgium and Greece are experiencing fiscal correction, the battle is far from over. Many other members of the EU will need to build up their fiscal surplus to counterbalance the vast debt that has been accumulated. The EU is really no different that the U.S. in that it needs to place full attention on its crisis and correct the situation immediately. Europe has crumbled more than the U.S. has as a result of the crisis. Europe is more segregated than the U.S. and doesn’t offer the same stability for foreign investment than the U.S.

The ruling elites are getting richer at the cost to the citizens. Shut up and Take It confines the conversation between the top and bottom. The Elite shouts imposing austerity to member countries. The elites are masterful, and reduced the population to nothing and nobody in the streets. In addition, they are authoritative at using cheap stories to swindle the masses. Stories of honor to be a member adding special events to disguise true intend. The elite had to create chaos for states, and as a result capitulated believing a better life in the Euro Zone. Militaries from members were often used to conquer and divide. Globalization falsely disguised under a canopy of hope and freedom; instead the elites' bankrupt countries having great debt taking out more

To Greece, the potential idea of entering the Eurozone was one that was too tempting. A key benefit would be the reduction of inflation rates in the short term. “By joining a monetary union with a credible anchor country or set of countries, a client country eliminates the inflation bias arising from time inconsistency in monetary policy” (Alesina & Barro, 2002). The inflation rate falls to that of the lowest member nation - representative of the credibility and reputation of the German banks and the entire OCA. Hence, a country such as Greece, which lacked the regulation and financial supervision, jumped at the opportunity of sharing the same credible status Germany worked hard to maintain.

To start off, Europe (as a political entity) is in a major economic crisis. The IMF (International Monetary Fund) was set up after World War Two in order to rebuild Europe and other countries of the world. The eurozone and Greece have been at a gridlock since the Greek economy has dropped so significantly. As stated in the article, (paraphrasing here) the eurozone will only give aid to Greece if the IMF agrees to give them funds as well (pushed by several countries in the European Union). The IMF is refusing to help bail out Greece any further until it is certain that Greece will uphold the terms of the bond agreements. In February, both the IMF and the eurozone agreed to subject Greece to more measures to ensure that Greece meets its

Dr. Clark: I am writing this brief policy memo in regard to the recent monetary crisis involving certain European countries, namely Greece and Spain. The focal organization handling the issue is the EU (European Union). The EU was established on November 1, 1993 by the treaty of Masstricht. It developed a single, regionalized, market structure through a system of standardized laws that apply in each member state so that citizens, goods, capital, and services are regional rather than local. With the establishment of a common currency, the Euro, the EU is also concerned with the overall economic and fiscal health of each member country. EU banks oversee localized financial institutions, and have the legal authority to enact localized changes in order to keep currency balanced. There are also branches of the EU that focus on legal and foreign policy issues, which sometimes blend into the economic realities of globalism (Europa, 2009). The EU acts as much more than an economic modifier, though, and member nations are encouraged to participate in cultural sharing (music, the arts, etc.), religious tolerance, and of course sport. This changes the overall rubric of the EU in that it actively seeks out foreign trade and markets as a large regional economic sector, so successfully that it counts for approximately 30 percent of world trade output (The EU Single, 2009).

The sovereign Euro crisis inflicting the Euro zone nations have both internal integration significance and international economic. It rarely truncated the internal integration of economic crisis but also accentuate effects to immediate distant nations including Australia (Malcolm Edey, 2011). The Euro zone member states experienced sovereign debt crisis which largely affected international economic and European integration. Regional economic crisis had immediate and clear effects on the far off nations including Australia. The sovereign debt crisis emanated from Euro zone governments facing bond market rates and unsustainable to repayments. These culminated in low resolution measures and high public debt (Prideaux, 2000) This meant potential decline in the GDP and decreased levels of exports. The EU summit was seen as a hope to a resolution of the European crisis but the agreement by the European leaders lacked focus on resolving the immediate issues. Its great attention was guaranteeing the survival of the Euro zone in its current form. There is a real possibility of departure of one or more countries from the Euro zone. Financial markets geographically distant from Europe to face European crisis.

There is also a lack of incentives being apart of the Eurozone as it is argued being a member protects a country form currency crisis. Therefore, there is less of an incentive for countries to implement structural reform and fiscal responsibility. For example, in good times Greece was able to benefit from very low bond yields on its debt because people thought that the Greek debt would be taken and secured by the rest of Europe, but this wasn’t the case and Greece fell victim to a false sense of security.

Issues in relation to Euro financial crisis have been essential in generation of intriguing questions of whether the common currency will have the substantial strength and competence towards surviving and overcoming the threat. Euro zone members should focus on striving to hold things together and weather the storm with reference to recent financial challenges in association with the common currency. Eurozone continues to face diverse economic as well as financial problems. In the first instance, the region faces fiscal crisis, which has been imminent in Greece and other nations such as Ireland. In addition, the region has been facing competitiveness crisis, long evident in the large current account deficits, and larger current account imbalances between European Union. In the third instance, the region faces banking crisis, which unfolded in Ireland prior to becoming acute in Spain (Fred 3).

To save the Eurozone countries, the European Central Bank (ECB) stepped out of its traditional role of maintaining price stability, setting key interest rates, and controlling the Euro supply (Alessi, 2012). ECB was the only institution capable of intervening and making decisive decision on how the debt crisis should be handled. However, critiques, like Germany, oppose ECB for getting involved in any fiscal activities. ECB, wanted to be a lender of last resort like the US Federal Bank of Reserve; such as printing money and lend money to countries or buy government bonds to help relieve the debt crisis. This did not happen until 2010 when Greece really was in deep trouble. The former president Jean-Claude Trichet and the ECB finally initiated a Securities Market Program; in which the ECB started purchasing the Greek’s government bonds on

It is necessary to look at the state of the Eurozone economy in order to properly analyse the decision of the European Central Bank (ECB) on September the 4th to cut its benchmark interest rate to 0.05%, and to launch an asset purchase program to buy debt products from the banks at the same time. Since the collapse of Lehman in 2008 and the global crisis that followed, the Eurozone has been contracting significantly to the extent where “consumer price inflation in the Eurozone fell to 0.3% in September.” (BBC, 2014) The ECB’s reaction has been to reduce interest rates and make use of quantitative easing to try to generate economic growth, albeit without much success. In June 2014, when Mr. Draghi, the president of the ECB, announced its latest cuts to 0.15%, he stated that he couldn’t see the rates dropping below this level. And yet, merely a few months later, he announced a further drop to 0.05%, in what many considered to be a desperate attempt to help pull the Eurozone out of deep crisis. The example of Japan’s 20-year struggle with deflation and a contracting economy was the driving force that pushed the ECB to take this drastic measure. Therefore, it is important to analyse and evaluate the decision of the ECB, set in the context of the current European economic situation, and the alternative policies that could be used.

The European Central Board(ECB) has acted very quickly and in sufficient manner since the start of Financial market disturbance. The ECB minimized the key policy rate by 325 basic points, interest rate on fundamental renegotiating operations now remains at 1.0%, its most reduced level since the launch of euro. ECB substantive monetary policy facilitating is as of now being felt in the genuine economy. Furthermore, bringing down the policy interest rate quickly and sharply, ECB have turned to exceptionally non-standard

The conditions installed by Maastricht (McCormick, J.2011) set the standards for future accessions of countries, so that the Eurozone would be sure not to take on any troubled economies. The conditions were as followed; 1/ The inflation rate of the country must be “no more than the average of the rate in the three countries with the lowest inflation rate.” 2/ the budget deficit must be “ no more than 3 per cent of GDP and its national debt no more than 60 per cent of GDP.” 3/ the country’s long term interest rate was to be “no more than 2 per cent of the average of the rate in the three countries with the lowest rates.” 4/ lastly the country’s currency must not have been “devalued against other member states’ for at least two years prior to monetary union.”

The European Central Bank (ECB) is the central bank for Europe’s single currency, the euro. The ECB’s main objective is to maintain the euro’s purchasing power, and therefore price stability, in the euro area, which comprises of the nineteen European Union countries that have introduced the euro currency since 1999 (ECB, 2015d). The ECB and the national central banks of the Member States, whose currency is the euro, together constitute the Eurosystem; the monetary authority of the euro area. In order to maintain price stability, the Eurosystem undertakes the necessary economic and monetary analyses and adopts and implements appropriate policies in order to respond to monetary and financial developments (ECB, 2015e). This essay will analyse the possible impacts of quantitative easing (QE), recently introduced by the European Central Bank. Firstly, I will look at the European Central Bank’s use of interest rates in controlling the growth of the economy. Secondly, I will look at the meaning and purpose of QE, and finally, I will analyse the impact of the programme of QE recently launched by the European Central Bank.

There are also chief drawbacks between the European Union and euro politically and economically. A risk that is involved in adopting the euro is that the monetary policy focus on the euro area. Once the euro has been adopted, the adjustments to the economic problems changes in a competitive position that need to be made via domestically and then set short term interest rates in the exchange rate. Some differences between countries will always exist so as long the markets are free to adjust to the changing of the economic conditions, country differentials should largely be of a transitory nature. The Monetary Union challenges the whole country when is relate it to individual citizens that have to adapt to a whole new monetary reference system. While this take time for older generations, who are used to what is cheap and expensive in the terms o f the old currency; its outstanding how fast the changeover goes to the younger generations. To conclude, a key challenge for all countries in the European Union lies in an open and transparent debate with the general public on the implications of euro are participation and also the necessary steps to the toward goal. Surveys show that there is a diminutive of citizens in the European Union Member States believe that adopting the euro will have a cocksure consequences for their countries. A small portion of people feel happy about the prospect of a future changeover.