Potential Solutions to Eurozone Crisis

Potential Solutions to the Euro-zone crisis

The whole world economy undergoes a protracted recession. Global financial crisis of 2007-2008 which started in the USA affected all countries due to the influence dollar has all over the world. 2009 was the starting year for a new crisis, now the European one. Situation in Europe stays deplorable for already four years. Many solutions to the crisis have been proposed, but still there wasn’t proposed any acceptable for all countries in the Euro-area. The objective of this essay is to briefly give some coverage of the Euro-zone crisis and to present the probable solutions to it.

The Euro-zone crisis is the debt crisis which has made some European countries (Greece, Portugal, Ireland, Italy, and Spain – PIIGS) struggle repaying their government, or national debt. There were some prerequisites which made it real for crisis to occur. Global financial crisis of 2007-2008, which slowed the economic growth of countries all around the world, was one of the reasons that already weakened economies continued their recession. The access to the Euro-zone’s low interest rate resulted in the possibilities for countries who were relatively new members of the zone of euro to receive cheap credits to finance increasing government expenditures. Consequently, national debt of these countries has risen every additional year after the acceptance euro as an official currency. Accordingly to the Maastricht Treaty, which enlightens the standards for the countries of the European Union, the GDP deficit has to be less than 3% and the national debt – less than 60% of the GDP (Maastricht Treaty). But looking through the data of all countries of the Euro-zone we can make a conclusion that not only PIIGS rejected to abide the standards of the Treaty for quite a long time (see Table 1). As an example, in the table below are represented some countries of the Euro-zone and their national debt in the percents to the GDP (The World Bank)....