The Criteria For The Eurozone Crisis

As of 2012, only seventeen of members of the European Union have decided to use Euros as their currency. In order for the members that adopted the Euro as their currency to successfully help their economic problems, the Eurozone members had to follow strict instructions put into place the European Union. The strict policies included strict control over inflation, government debt, and long-term interest rates (Mckee 525). The union put these strict policies into place to give the union the tools that it needed to take in order to help fix the economic crisis in each country participating in the Eurozone. Without the full cooperation of each country, it could cause the plans to fix the economic crisis within each country to fail because of the different interests by each individual country.

In this research paper, we will be covering the causes, financial repercussions and social implications of this crisis. We will also be examining the methods used by the Greek government to rescue the economy. To conclude, we will discuss possible resolution measures and objectively forecast the future

I n order to avoid the default they had to ask other European countries and the I nternational Monetary Fund ( I MF) for loans. (Nelson, Belkin and Mix, 2011). Analyzing the Eurozone crisis it is true to say tha t Greece has the highest level of public debt in the Eurozone as well as one of the b iggest budget deficits. (Nelson, Belkin and Mix, 2011). However, the high level of public d ebt does not always lead to a catastrophe as in a Greece’s situation.

Furthermore, the Maastricht treaty was responsible for the creation of the European Union and it reflected the serious intentions of all countries to create a common economic monetary union (Investopedia). It provided rigorous economic regulations, known as “convergence criteria” (Jason Voss, CFA) in which it is mandatory

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

The Maastricht Treaty was a complex 1993 agreement that transformed the European Economic Community into the European Union so as to increase political and economic cooperation in Europe. Political objectives were given far greater consideration in the agreement than in any preceding agreement among the member states. Goals included improving the democratic legitimacy and efficacy of insitutions, furthering the economic and monetary union of states, and facilitating the development of a common foreign and security policy as well as broadening the social sphere of the existing European Community. The first pillar of the agreement established the European Community and Parliament,

After the Lisbon treaty was signed, it became noticeable that the Eurozone (which started in Greece) was in a deep financial crisis. The EU has taken a number of different steps to deal with the financial debt crisis throughout the Eurozone. These are the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM) and the European Financial Stabilisation Mechanism (EFSM). Throughout this essay I will concentrate on the EFSF and the EFSM and if and how the provisions of the Unions treaty were violated by these. I will evaluate different case law throughout recent years to show us the illegality of these, which often violated the treaties of the European Union while also talking a little bit about the ESM, ECB and the IMF. I will also talk about the Greek Bailout and the bail out clause with a small reference to the Pringle case.

Finally, five decades after the end of the WWII, Europe was in the final stage of essentially accomplishing the “unacomplishalble”. On January 1, 1999 the European Union and its 11 pioneering nations composed of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal, and Spain accepted the Euro as their new currency.

The debt crisis, explained above, in several member states of the euro area has contributed in raising doubts about the viability of European Economic and Monetary Union(EMU) and the future of the euro.

The Treaties of Rome which established the European Economic Community in 1957 announced that a Single European Market was the aim of the development which would accelerate prosperity and contribute to a closer union of the European nations. The Single European Act (1986) which launched the European Single Market programme and the Treaty of the European Union is based on this foundation. The treaties lead to the Economic and Monetary Union and are the cornerstones for the coherent currency. The third step towards the EMU began at the 1st January 1999, when the conversion rate was irresistibly locked in. From then on all the member states operated in a unitary monetary policy. The Euro was established as the legal means of payment and at first the eleven national currencies were reduced to subunits of the Euro. Greece joined the Euro system on 1st January 2001 and finally the European paper money and coinage were introduced to the 12 member states of the European Union on 1st January 2002. The introduction of the Euro presents a milestone on the way towards a united Europe in which the people, the public services and the assets have freedom of movement. The member states hoped to gain from the Monetary Union two kind of chances: On one hand it is supposed to present the motor for further political integration in Europe and on the other hand – in addition to the Single Market – it was expected to launch higher

In this paper, we present an in-depth analysis of the nature, causes, economic consequences, prevention as well as control of the European Debt crisis. A definition of the debt crisis is also provided. Recommendations on the way forward are also provided.

Nevertheless, the EURO Zone countries do have different fiscal policies of their own and here lies root cause of the debt crisis. A uniform monetary policy but different fiscal policies mean that the EMU controls the flow of money in the EURO Zone affecting the interest rates of this region where the

To begin with, the countries initially joining the euro were too heterogeneous, showing broad differences not only regarding their economic structure but also considering their budget practices and civil approaches (Feldstein, 2011). Moreover, differences regarding production structure, qualifications of the labour force as well as capital stock are considerable (Fürrutter, 2012). However, in order to make a single currency work, adequate similarities between the countries adopting the currency are required. The more similar countries are, the more will a common interest and exchange rate suit all. For this reason, the convergence criteria were created and had to be fulfilled upon entry to the Eurozone. Providing general criterion for price and exchange rate stability, continuous and flawless public finances, the Maastricht criteria aimed at safeguarding the country’s ability to adopt the single currency (European Commission, 2015). However, exceptions were made and even countries that did not meet the admission standards of a budget deficit below three percent of GDP and a national debt below 60 percent of GDP – in particular, Italy and Spain –

The Unified monetary policy has been considered as the most impressive step into the practical Europeanisation, by which Euro citizens has not only felt the changes in daily life, but potentially internalised the positive concept that being part of EU will bring more happiness to next generations. A continuous debate between convergence and divergence within European continent had remained controversy and unresolved along with several significant agreements made due to the predicted economic advantages, including the boundary breaking-down of tariff and regulations resulting in more convenience for international transactions, and utilising single monetary for saving additional costs of currencies exchanges(Gabel and Palmer, 1995), and so

The European Monetary Union is distinguished by a general monetary policy and in the same time, also by twelve national fiscal policies from the member states. The European Monetary Union is unique and different in term of operating mechanism as it lacks a central fiscal authority. The intention of the absence of a central fiscal authority is to establish a similar construction of the organisation, with a fiscal decentralization (Furceri, 2004). Analysts contend that the carefully management of the European Monetary Union will boost a positive relationship between the free trade of the member states and the monetary system itself, since, the monetary system will be able to reduce the cost of transportation transaction, stabilizing the society