The Eurozone Debt Crisis And Its Impacts
Some ten years ago some of the member nations of Europe united with the basic thought
to strengthen the bond amongst various member nations to improve both the economic conditions and political relations. In achieving foreign exchange currencies this supported a lot but however, created negative effects to the European economy. This influenced the Europe, entire countries of EC and along with the member nations that are a part of Eurozone.
This has also affected Greece to a great extent. The despair of the debt situated in Greece might be considered as the tip of an iceberg. This is because various other countries like Ireland, Spain, Italy and Portugal might require some help from their IMF or International Monetary Fund. They would also have to ask loans from their neighbor countries of Europe.
Other nations that were affected included Greece too. There were huge debt crisis in Greece that resulted in the downfall of its economy. Other countries such as Spain, Italy, Portugal and Ireland also asked for help from the IMF also called as International Monetary Fund. Apart from this they also asked for loans from their surrounding European countries.
So it is better for Europe to have a European bank that is standard, one currency and single interest rate. This will not strengthen the economy but also unite different member nations who are a part of the Eurozone. The reason is it is the major state which would reflect its conditions in the US that uses federal form of government to control various states. The Federal Reserve in United States declares the interest rate of bank for the whole country and also the independent states follow the rule to show the tax raising power of their own. Here comes the difference.
You can get idea in the varied economy of different European nations by comparing the level of unemployment in Spain with 19.1% and Netherlands at 4.1 %. Government also tried to raise the interest rates to control inflation, but it is very difficult for those in the Eurozone to follow that. It is the European bank that decides the interest rates which are being followed by the individual nations. The problem is "single size suits all" system that is not possible to achieve in this case.
Now-a-days European government has invested huge amount of money to their economies to recover and kick start their banks. Most probably this is the reason of resentment and fear in Germany as they have been given the responsibility to rescue the economy of Greece.
Suppose the bond of Greek administration ends then it would severely affect the other banks in different countries of Europe with devastating results. The debts are in trillions which even IMF could not bear to recover the economies of the nations which could even probably include the United Kingdom.
But now, European government is working a lot to improve their economy and not to create any major downfalls as those were seen in Spain.
by: Nell Harrison..
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