Roots of Eu Crisis

What are the roots of European Financial and Economic Crisis?

The European debt crisis broke out about couple of years ago. Greece became the first country where the level of debt was too high.

There are couple of reasons for the European crisis. It goes back to 1999 and 2002, when the euro zone was created, the locomotives of the European economy were the initiators to have single currency – euro. At that time many organizations gave their advice as to whether the financial conditions of candidate countries match the requirements which are necessary to participate in the euro area. In the case of Greece it is known that country has underestimated the level of the deficit in order to enter into an alliance. As the euro has evolved, it became clear that those countries which have initiated the project have undertaken it for one reason – a guaranteed market for their products. States with high proportion of exports, such as Germany and France were interested in a strong currency, and hoped that this will stabilize the financial system, hoping for the help from other members and European Commission, in fact, in recent years, and carried out in respect of problem states. That led to the fact that the rate of production in EU differed dramatically. Major Western European countries took over the entire market and aren’t going to give it up. That might be the one reason why crisis is happening and deepening. Another reason is that it became clear that the costs of the EU countries are growing and they had to borrow. And when it became clear that to take in the amounts to compensate for the deficit, it was impossible, so they began issuing government bonds. Part of the Western European banks bought them at the very least, but when it became clear that the pace of industries are so slow, that does not allow you to cover those issued bonds and loans, it became clear that except for the ECB they couldn’t trust anyone.

According to Patrick Butler, the member of Raiffeisen...