2. AGENDA
The Euro Zone
Benefits of a Shared Currency
So, what happened?
Greece…
Bailouts…
Spain and Italy
Fear of default…
No Simple Solutions
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3. THE EURO ZONE
The Euro is the official currency of the 17 countries that form the Eurozone
The European Central Bank (ECB) located in Frankfurt, Germany is
responsible for the monetary policy of the Eurozone
In early stages, the euro was used only in the stock markets, for financial
transactions between banks and for cashless shopping
The euro notes and coins were introduced in January of 2002.
Ten countries (Bulgaria, the Czech Republic, Denmark, Hungary, Latvia,
Lithuania, Poland, Romania, Sweden, and the United Kingdom) are EU
members but do not use the euro.
Three member states - Britain, Sweden and Denmark - stayed out of this final
stage of EMU.
Member countries of the Euro Zone
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5. BENEFITS OF A SHARED CURRENCY
Single currency in single market makes sense
Price transparency
Uncertainty caused by Exchange rate
fluctuations eliminated
Increased Trade and reduced costs to firms
Strengthen the economies of euro zone
members
Borrow money from international financial
markets and investors at a much lower rate
A tangible sign of a Europen identity
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6. SO, WHAT HAPPENED?
First of all, many euro zone members did not adhere to the guidelines
for borrowing which were in place
Italy and Germany were the first to break the 3% borrowing rule, with
France not far behind.
The largest economies in the euro zone, only Spain kept to the
guidelines until the financial crisis of 2008
In April, 2009 the EU orders France, Spain, the Irish Republic and
Greece to reduce their budget deficits - the difference between their
spending and tax receipts.
In December 2009, Greece admits that its debts have reached 300bn
euros - the highest in modern history.
Sovereign Debt: Bonds issued by a national government in a foreign
currency, in order to finance the issuing country's growth.
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8. EUROPE CRISIS
Before one to could even think of the end of great recession of 2008,
Greece gave birth to another crisis.
Greece debt crisis is actually an evolution of the global crisis.
Greece allowed deficits from Central bank and government bonds to
pile up.
Greece debt came to light in 2009.
Poor, poor Greece
In 2009 Greece was ranked second lowest on EU’s index of economic
freedom.
Country suffers from high level corruption.
Economic growth turned negative in 2009 for the first time since 1993.
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9. EUROPEAN DEBT CRISIS-DETAIL
1999
On 1 January, the currency
officially comes into
existence.
1999
2001
2001
Greece joins the euro.
2002
2002
On 1 January, notes and
coins are introduced.
2008
2008
Malta and Cyprus join the euro,
In December, EU leaders agree
on a 200bn-euro stimulus plan to
help boost European growth
following the global financial
crisis.
2009 2009 2010 2012
2009
In April, the EU orders France, Spain,
the Irish Republic and Greece to
reduce their budget deficits - the
difference between their spending and
tax receipts
2010
Concern starts to build
about all the heavily
indebted countries in
Europe - Portugal, Ireland,
Greece and Spain (PIGS).
2011
In April, Portugal admits
it cannot deal with its
finances itself and asks
the EU for help.
2012
-On 12 February,
Greece passes the
unpopular austerity bill
in parliament - two
months before a
general election.
-March begins with the
news that the Eurozone
jobless rate has hit a
new high
2009
In December, Greece
admits that its debts have
reached 300bn euros - the
highest in modern history.
2009
In October, amid much anger towards the
previous government over corruption and
spending, George Papandreou's Socialists
win an emphatic snap general election victory
in Greece.
2011
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10. PIIGS
PIIGS is an acronym that refers to the economies of Portugal, Greece,
Spain, and either or both Ireland and Italy..
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13. AFFECT ON OTHER COUNTRIES
Contagion
If Greece is not helped, it could drag down the entire European
Union
Threatening economies: Portugal, Spain and Italy
The impact on the common European currency
15 other euro zone economies who have agreed to help out
Greece
IMF announced a bail-out package
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14. PROPOSED SOLUTIONS
First, citizens must elect uncorrupt government officials who care for the
economic and political growth of the country.
The government must give lower wages looking at threw economic situation
of the country.
They should reduce the trade imbalances- Encourage exports
It was not a wise economic move to borrow money while already in debt
On the restructuring of the debt and the implementation of austerity
measures-Improve Tax Collection
Improve Tourism
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