Euro Crisis: Greece Insights

Will the Euro Survive the Greek Crisis?

A decade ago, the introduction of the euro, the common currency of 16 of the 27 EU member states, was a political decision – not a monetary one. One decade later, the euro is in serious trouble. The problems result from the recent economic crisis which have badly affected the economy of Greece, one of the countries of the eurozone. Analysts doubt whether the government in Athens is able or willing to address Greece’s financial problems. If not, the other 15 nations using the euro will suffer the consequences, which is something they are not likely to accept.

The problems of the euro affect the entire world. The EU currency was not introduced because of economic considerations, but because the European Union is pretending to be a genuine state and states are expected to have single national currencies. Hoping to become a powerful political force in its own right, the EU adopted the euro as the common currency of some 327 million Europeans, so that the currency’s economic power would prefigure the political power to be. The eurozone represents the second largest economy in the world. During the past decade, the euro became the second largest reserve currency after the U.S. dollar. With banknotes and coins in circulation for more than €790 billion, the euro has surpassed the U.S. dollar’s circulation. The euro appeared to be very strong, with the value of the U.S. dollar, the British pound, and other currencies dramatically falling in comparison to it – one of the causes of Greece’s problems. Tourism is a major economic sector in Greece. For tourists from outside the eurozone, such as the Americans and British, the country became too expensive as a holiday destination. Last year, when the world economic crisis also affected Europe, with a huge drop in the numbers of EU-citizens, such as Italians, that headed for Greece, the Greek economy collapsed and the Greek government was no longer able to pay the country’s public debts....