The Economic Crisis Of Eurozone Countries

2220 Words9 Pages
Background: From 2009 onwards several Eurozone countries have come under pressure from the financial markets as a result of rising debt levels, economic contraction and decreasing solvency indicated by all major rating agencies. Through raising funding prices on the markets and the lack of trust in these Eurozone members – they were not able to finance themselves to sustainable costs anymore. One country after the other (Greece, Ireland, Portugal, Spain and Cyprus) had to be “rescued” by the then established financial support measures such as the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM). In exchange for these “bail-outs” countries had to fulfill certain economic conditions – mostly spending cuts – which led in turn to political change and instability.

In July 2012 the ECB president Mario Draghi gave - for the financial community remarkable speech when he said that the ECB “will do whatever it takes” to rescue the Euro. This announcement since then calmed down the markets and the funding prices of most Eurozone members declined significantly. However, it is not clear for how long this peace will last – after all the Eurozone has structural problems not monetary ones.

Analysis: The Eurozone-crisis needs to be dealt very carefully, as there is a lot at stake for all major players (Eurozone members, EU, ECB) involved and every step that will be taken will be difficult to reverse. Therefore, it must be examined where the roots of
Get Access