1. CURRENT EURO CRISISPRESENTED BYANIL PATILGAJENDRAARUN KHEDWAL

2. AGENDA The Euro Zone Benefits of a Shared Currency So, what happened? Greece Bailouts Spain and Italy Fear of default No Simple Solutions2 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 isresponsible for the monetary policy of the Eurozone In early stages, the euro was used only in the stock markets, for financialtransactions 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 EUmembers but do not use the euro. Three member states - Britain, Sweden and Denmark - stayed out of this finalstage of EMU.Member countries of the Euro Zone3 4. THE EURO AS CURRENCY4 5. BENEFITS OF A SHARED CURRENCY Single currency in single market makes sense Price transparency Uncertainty caused by Exchange ratefluctuations eliminated Increased Trade and reduced costs to firms Strengthen the economies of euro zonemembers Borrow money from international financialmarkets and investors at a much lower rate A tangible sign of a Europen identity5 6. SO, WHAT HAPPENED? First of all, many euro zone members did not adhere to the guidelinesfor borrowing which were in place Italy and Germany were the first to break the 3% borrowing rule, withFrance not far behind. The largest economies in the euro zone, only Spain kept to theguidelines until the financial crisis of 2008 In April, 2009 the EU orders France, Spain, the Irish Republic andGreece to reduce their budget deficits - the difference between theirspending and tax receipts. In December 2009, Greece admits that its debts have reached 300bneuros - the highest in modern history. Sovereign Debt: Bonds issued by a national government in a foreigncurrency, in order to finance the issuing countrys growth.6 7. TIMELINE OF EUROPEAN DEBTCRISIS7 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 topile up. Greece debt came to light in 2009. Poor, poor Greece In 2009 Greece was ranked second lowest on EUs index of economicfreedom. Country suffers from high level corruption. Economic growth turned negative in 2009 for the first time since 1993.8 9. EUROPEAN DEBT CRISIS-DETAIL1999On 1 January, the currencyofficially comes intoexistence.199920012001Greece joins the euro.20022002On 1 January, notes andcoins are introduced.20082008Malta and Cyprus join the euro,In December, EU leaders agreeon a 200bn-euro stimulus plan tohelp boost European growthfollowing the global financialcrisis.2009 2009 2010 20122009In April, the EU orders France, Spain,the Irish Republic and Greece toreduce their budget deficits - thedifference between their spending andtax receipts2010Concern starts to buildabout all the heavilyindebted countries inEurope - Portugal, Ireland,Greece and Spain (PIGS).2011In April, Portugal admitsit cannot deal with itsfinances itself and asksthe EU for help.2012-On 12 February,Greece passes theunpopular austerity billin parliament - twomonths before ageneral election.-March begins with thenews that the Eurozonejobless rate has hit anew high2009In December, Greeceadmits that its debts havereached 300bn euros - thehighest in modern history.2009In October, amid much anger towards theprevious government over corruption andspending, George Papandreous Socialistswin an emphatic snap general election victoryin Greece.20119 10. PIIGS PIIGS is an acronym that refers to the economies of Portugal, Greece,Spain, and either or both Ireland and Italy..10 11. GREECES DEBT DYNAMICSSource: Economist.com11 12. BAILOUT- IMF & EUROZONE12 13. AFFECT ON OTHER COUNTRIESContagion If Greece is not helped, it could drag down the entire EuropeanUnion Threatening economies: Portugal, Spain and Italy The impact on the common European currency 15 other euro zone economies who have agreed to help outGreece IMF announced a bail-out package13 14. PROPOSED SOLUTIONS First, citizens must elect uncorrupt government officials who care for theeconomic and political growth of the country. The government must give lower wages looking at threw economic situationof 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 austeritymeasures-Improve Tax Collection Improve Tourism14 15. VIDEO15 16. Questions & Suggestions areWelcomeThanks16