The Pros And Cons Of The Euro Crisis

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

The European sovereign debt crisis started in 2008, with the collapse of Iceland's banking system, and spread primarily to Greece, Ireland and Portugal during 2009. The debt crisis led to a crisis of confidence for European

It all started in the summer of 2007 when a crisis hit the U.S., and because of the huge government interventions that were made, the U.S. and most European countries got into a recession. The EU crisis was also caused by big debts made mostly in Spain and Italy, before 2008. The private sectors (companies and mortgage borrowers) who were taking out loans were the main reason for this crisis. There was a decrease in the interests rates in southern European countries when they joined the euro and that resulted and caused the countries to go into a huge debt. This had negative effects on the financial markets, a slowing down of the economic growth in the industrialized countries, and impacted the European labor markets. After the Second

This story is enlightening due to a clear overview of how a single currency with the ultimate goal of union and growth results idealistic as differences, not only regarding cultural and social backgrounds but also political ones, makes it very difficult for the Eurozone as a whole to have the same objectives and interests.

The choice for the European Union to adopt a single currency for the European Community was first introduced in the 1970 Werner Report. This idea was then developed into the European Monetary System (EMS). The Maastricht Treaty (1992) made EMU part of EU law and set out a plan for a single currency to be established by 1999 . It was thought that a common currency would increase efficiency in the EU, thereby raising the standard of living and develop a sense of European Identity. It was agreed that in order to adopt the single currency, EU members had to meet certain conditions. The conditions include to keep their exchange rates within bands called the Exchange Rate Mechanism (ERM), have low interest rates and low inflation and keep government spending and borrowing under control. In 1998, 11 member states had agreed to fix their exchange rates where the European Central Bank would take over and have the power to change their interest rates. The single currency is now, in 2016, is shared by 19 member states.

The recent financial crisis that was felt around the globe and most significantly in the USA and Europe has had various detrimental and long lasting effects. Superficially the effects felt by the USA and Europe appear to be the same, but there are important differences in its effect, and the way in which both dealt, and are still

financial crisis that is still affecting the European continues have destroyed the EU reputation of being a formidable economic block. Over the past seven years, Greek, Portugal, Spain and Ireland have all been on the edge of finical collapse threatening to bring down the economies of Europe.

In 2007 - 2008 the world was struck by a financial crisis which lead the Eurozone into a

When the crisis began in the mid-2007 caused by sub-prime bubble, uncertainty among banks about the creditworthiness for their clients and customers deteriorated as they had majorly invested in very complex and overpriced financial products. As a result, the interbank market became volatile and risk premiums on interbank loans increased. Banks faced a serious liquidity problem, as they experienced major difficulties to revolve their short-term debt. At that stage, policymakers still perceived the crisis primarily as a liquidity problem. However, it was widely believed that the European economy would be largely safe to the financial turbulence. The real economy, though slowing, was thriving on strong fundamentals such as rapid export growth

The overleveraged positions of financial institutions owing to cheap credit demanded course correction of asset prices across various economies. Many of the EU countries had heavy exposures to the US subprime debt and this scenario became very evident post Lehman collapse. BNP Paribas had serious exposure to CDS of US subprime and several financial institutions across EU had heavy investments in US subprime debts. UK banks had to write down over USD 300 Bn and EU countries around EUR 500 to 800 Bn . This made the financial system of EU vulnerable and the subprime crisis later evolved into Eurozone crisis in EU area. Although, the Eurozone crisis is caused by several

There are two major hypotheses about the source of the current crisis, but the academic literature seems to have reached a consensus that there are internal and structural problems in the

That the incomplete preparatory works in the initial period of the EU monetary establishment partly resulting in the euro crisis, had revealed how unrigorous and incompatible mechanisms the EU institutions proposed and conducted. There is no mechanism set up for addressing the debt crisis problem tracked back to the time point when the euro was established, and thus resulted in the hastily drawn and agreed emergency rescue plans, which were viewed unfavourable to the majority of EU countries as they seemed merely synonymous with those bailouts. Based on this ambiguous and unstable solutions the EU had provided, the worldwide disappointing impression had been created on the split opinions of the larger countries that offered the loans regarding how best to save the crisis. In consequence, the crisis had been prolonged along with the increasingly weakened EU confidence in international markets due to the lack of decisive action. (Harari, 2014)

Euro crisis also known as European sovereign debt crisis resulted from a combination of factors, including the globalisation of finance, easy credit conditions during the 2001–2008 period that encouraged high-risk lending and borrowing practices; the GFC which exposed the fiscal weakness and high debts levels of many nations; international trade imbalances; real estate

First, the banking crisis in Europe causes came from some specifics reasons. One can tell from the reduction of foreign capital and the relationship with the industry. After the World War I, European countries depended on financial support from abroad, especially in America, to rebuild and recover their nations. However, shortly after the crash of Wall Street in 1929, American investors withdrew their loans and money quickly from banks; it led many banks in American and in Europe in a danger of lacking currency. European countries were unable to repay American, and they also needed money to spend and revive their economies. The commercial banks could not handle the

It was created to establish monetary union within the European Union under the provisions that were set out in the 1992 Maastricht Treaty. This Treaty outlined that member states using the euro must follow strict guidelines such as having a debt less than sixty percent of GDP