The European sovereign debt crisis dominated international financial Essay - 1

The European sovereign debt crisis dominated international financial markets during 2010-2012. Economies slash into recession and financial market volatility was heights - Essay Exampled not be contained as the problems only in the Greek region, minded(p) the economical and financial structure governing the European nations it was apparent that this crisis was a truly European crisis and couldnt be handled in isolation with any one(a) country. The Greek deficit was a direct result of theThe European Nation came into being in 1992 through the signing of the Maastricht Treaty. The treaty established the euro as levelheaded tender for all the participating nations, with the exclusive responsibility of forming the financial policy for the euro zone falling on the European Central Bank. The treaty promised great benefits for the nations admitted to the euro zone. at that place were two major economic rewards firstly it increased the ease of borrowing for individual governments bas ed on the average rating for the whole of euro zone nations with high deficits and low GDP would enjoy the same average rating as a benefit from the high economic performance of stronger euro zone economies. Secondly, the uniform monetary policy meant that no nation could devalue its currency or lower interest rates etc to increase their competitive advantage. This leveled the playing field for all participants of the Euro zone.However, the chemical mechanism behind these benefits were risky and the major criticism for the treaty. The countries were still held responsible for designing their fiscal policies in order to positively influence the economy, but without the control of monetary measures, they could not manage their sovereign debt problems through devaluation of currency or lowering the interest rates. Another concern, which would later prove to be true, was the idea that some economies talent become free-riders and depend on other participating nations in the euro zone t o indulge in high debt to finance economic activities without the required increase in productivity. In order to put a check and balance on the system, a convergence criteria was set upon for the