During a certain period, the funny abbreviation "PIIGS" was to be found everywhere in the news; this referred to Portugal, Italy, Ireland, Greece, Spain, the five European "sick men", endangering the survival of the Eurozone itself. While their situation still remains critical, the debt of the Eurozone reached 7000 billion euros. Since its creation, the common currency has had its share of massive support (2nd biggest world currency, leading role in financial markets, etc) as well as strong opposition: inflation, criticism regarding the loss of monetary sovereignty, need of abiding by drastic "convergence criteria", etc. A single and unified currency was supposed to act as a shield against any big financial disturbance.
But the financial crisis that started in 2008 proved the contrary. Indeed, the Eurozone officially entered recession during the third quarter of 2008. Especially in 2009-2010, it showed a huge dichotomy between monetary policies decided and implemented by a unified system of central banks, parallel to national economic measures taken by national authorities willing to keep their independence leading to growing economic gaps. But the Commission and other bodies have acted, and Treaties have been modified. Many measures have been taken since that date, even though a lot still needs to be done. It is commonly admitted now that the economic governance must improve.
[...] Reinforcing and renewing what already exists but has never really worked. One lesson learned from the crisis is that fiscal policy should not be looked at in isolation. As a result, several proposals aimed at coming back together to healthy fundamentals have been made. At the EcoFin meeting of 12 September the French proposal of creating a European Financial Fund was rejected by Germany and the ECB and in October of that year, the proposal of reinforcing the structure of the Eurogroupe was rejected too. [...]
[...] One has to remind that the ECB, after having long been criticized, has seen its legitimity enhanced thanks to its extremely quick reaction, saving endangered banks with series of complex financial measures. Undoubtedly, the most impressive measure recently taken was the implementation of a global European emergency plan worth €750billion Euros. However, this took a long time and faced strong opposition. After long discussions, it was adopted on May so as to make the Greek crisis not affect the other euro zone members, especially Italy, Portugal, Spain. This is the “European Financial Stability Fund” (EFSF). [...]
[...] It is wished that they be quicker and efficient, in case the convergence criteria are not taken into account. Any State having a debt superior to 60% of its GDP would have – after having been warned- to quickly reduce it during the three following years. In case of non- compliance, special measures (“Excessive Deficit Procedure”) and fines would be decided. A new “reverse voting mechanism” is also envisaged: when imposing sanctions, a Commission proposal will be considered adopted unless the Council rejects it by a qualified majority These measures could be useful and certainly are necessary –for example, Ireland has been asked to reduce its deficit that has reached 32% of GDP. [...]
[...] And the debt of the Eurozone reaches 7000 billion Euros. Since its creation, the common currency has faced not only support (2nd world currency, leading role in financial markets ) but also strong opposition: inflation, criticism about the loss of monetary sovereignty, need of abiding by drastic “convergence criteria”, etc. A single and unified currency was supposed to act as a shield against any big financial disturbance. But the financial crisis that started in 2008 proved the contrary. Indeed, the Eurozone officially entered recession during the third quarter of 2008. [...]
[...] And regarding the currency topic too, the European Central Bank also has a crucial word to say. Given that the crisis has not finished damaging European economies, we can wonder: what has been proposed and done so as to overcome the Euro crisis, and what remains to be done? We will hence focus first on the many proposals that have been made, and then will be shown what has been accomplished for the moment; however, there is still a lot at stake. [...]
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