A Revisit to European Sovereign Debt Crisis

Abstract

 

The Euro Crisis or the European sovereign debt crisis is now seemed to be over and the euro nations are able to re-finance their government debts which seemed to be almost unfeasible at the time of happening of crisis. This crisis was not a result of a single decision or failure of system but the voyage to this destiny was full of wrong policy decisions implemented in the name of financial integration of European countries. The performance of macroeconomic factors like GDP, Gross Debt to GDP ratio and current account to GDP ratio give indication about the financial stability of a sovereign and ignorance of these factors may result in fatal consequences as observed in the case of Euro zone failure. The present paper has reviewed the journey of euro zone crisis and made an effort to see whether future forecasts for euro sovereign are better than the crisis period or not. The funding of this sovereign debt will be by third parties including international organizations. Under such conditions what will happen to rest of the world by financing these financially unstable economies? Will it be taking the world to more complex financial fiasco where more number of sovereign collapses will be witnessed?

Keywords: CAD, European Monetary Union, Euro Debt Crisis, Gross Domestic Product, Gross Debt to GDP Ratio.