Fiscal and financial crisis in the Euro Zone and the measures for improvement to avoid the occurrence of an Asia type crisis

By





Abstract

The aim of this study is to assess the various factors that lead to the financial crisis that took place in the Euro-Zone. Through this study the researcher aims at suggesting solutions and measurements which can be applied in such situations in order to avert similar instances in the future. The goal is to understand through the Euro Crisis various initiatives and solutions which can prevent similar Asia type Crisis. By the end of this study the researcher will provide the reader with feasible solutions and possible procedures and measures that can help avert future crisis.

Abstracti

CHAPTER 1: INTRODUCTION1

Background of Study1

Statement of Problem1

Purpose of this study2

Methodology3

Research Questions3

Research Aims and Objectives4

Objectives4

Significance of this study4

Structure of this Study5

CHAPTER 2: LITERATURE REVIEW7

CHAPTER 1: INTRODUCTION

Background of Study

The Euro Zone which is also called the Euro Area is basically a monetary and economic union which consists of 17 member nations. Each one of these states has adopted the Euro (€) as a common currency. Considering the fact that since the whole zone is using the same currency there is a great need for proper monitoring of the situation. The monetary policies are handled by the European Central Bank. All heads from the National central bank are part of the ECB. The most crucial responsibility of the ECB is to ensure that their remains a control over inflation.

The Euro zone has been dealing with a serious financial crisis since the early 2000's. However in order to deal with the situation the Euro Zone had begun funding member countries with loans in order to keep the situation within the region free from any external threat or crisis.

In order to have a uniform monetary system in the Euro Zone there were various factors that needed to be considered for instance in the beginning of 2010 the European Union identified various irregularities in the accounting system followed in Greece. This caused a revision of the budget deficits.

Statement of Problem

The problems and challenges that the countries situated within the Euro Zone are far greater than people willingly accept. The concept of sovereign Debt has been on the rise ever since the economic slump hit the region in the year 2008- 2009. The reasons behind this crisis are numerous however mostly people suggest that it was all due to high costs of the banking sector bailouts. These bailouts were necessary considering the property crisis that hit this region. However it is noteworthy to mention the fact that in various Euro Zone countries there is also a profound structural weakness which could be as a result of poor competition. This crisis has been on the rise for the many few years and even though a number of possible solutions have been devised there is still a great challenge in being able to identify the right measures which can alleviate this region from this constant ...