What Were the Main Causes of the Eurozone Financial Crisis? Essay

976 WordsJun 22, 20144 Pages
The European Union famously know as the EU which consists of 28 member nations. However, in the the 1999 a group called Eurozone consisting of 17 nations was formed by this they aimed to achieve foreign and security policy through which the European union has developed a itself in playing a role for external relations and defence. In the mid 1992, the Eu(european union) signed a treaty called Maastricht Treaty, under this they pledged to limit their debt levels and deficit spending .But, in the early 2000s, a number of EU member states were failing to stay within the limits of the Maastricht criteria and turned to securitising of the future government revenues to reduce their debts or deficits.This allowed the sovereigns to mask their debt and deficit levels through a various techniques including, accounting inconsistently, transactions by off-balance-sheet as well as the use of complex currency and credit derivatives structures.The European sovereign debt crisis (often referred to as the Eurozone crisis) is an ongoing financial crisis that has made it difficult for different countries in the European areas to repay or re-finance their government debts without any help of the third parties.This crisis did not only bring adverse economic effects for the countries that are affected, but it has also a huge political impact on the governments which are presently ruling in 8 out of 17 eurozone countries, leading to shift of power in Greece, Ireland, Italy, Portugal, Spain, Slovenia, Slovakia, and the Netherlands. Apart from political measures and bailout programme which are being implemented to weaken the Eurozone financial crisis, the European Central Bank (ECB) is also doing its part by lowering interest rates and providing cheap loans of more than one trillion Euro to maintain money flows between European banks. On 6 September 2012, the ECB also brought rest to

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