The reserch paper on The Euro Crisis Essay Example | Topics and Well Written Essays - 4000 words

The reserch paper on The Euro Crisis - Essay Example This common national currency Euro is utilised by over 300 million people in the world’s most developed economic region, which is considered as a record in the international monetary system. The common currency Euro was established by the European nations with the objectives of acquiring better integration among member nations as well as to enhance the currency value in the global economy (Feenstra & Taylor, 2012). In the year 1999, Economic and Monetary Union (EMU) was also established with the motive of utilising the single national currency i.e. Euro for all the trade activities performed by the European nations. In the starting of 2002, there were 12 countries in Europe Union (EU) which include Germany, Austria, Belgium, Ireland, Finland, Italy, France, Greece, Netherlands, Spain, Luxembourg and Portugal that utilised Euro as their national currency. Later on many countries also joined EU and adopted Euro as a national currency. However, three EU member countries namely Sw eden, United Kingdom and Denmark do not used Euro as their national currency. By the year 2010, there were 27 countries as members of EU. In Euro zone, the main objective of EMU was to establish a common monetary currency for EU members and to coordinate the monetary affairs of the member nations through European Central Bank (ECB). The euro zone has faced financial crisis due to sluggish economic growth as well as high rate of underemployment. Moreover, economic recession of 2008 has also raised many economic problems in the European nations (Arestis & Sawyer, 2012). Considering this aspect, the review will emphasize on the factors accountable for crisis in the European nations. The objective of the review is to recognise the reasons for Euro crisis. Moreover, review will also focus on remedies necessary for minimising the effects of Euro crisis in the European nations and other countries. The review includes other aspects related to the Euro crisis along with economic problems fac ed by the European nations. Background The Euro system of the European countries consists of ECB and 11 central banks of different nations. The Euro system has four major jobs with respect to economic growth and sustainability. The first job is to execute the monetary strategies implemented by Central Council of ECB. The second job is to undertake foreign exchange functions and the third job is to maintain money reserves of euro area nations. The Euro system is responsible for coordinating as well as managing monetary policy of EU. Euro was considered as a single common currency by EU members with the objective of acquiring a stabilised price for a long period of time. Moreover, with common currency it was expected that it would help to expand the market and also would assist in better integration of capital, goods and service. Furthermore, it was anticipated that with the introduction of common currency, Euro would be an important currency relating to foreign exchange markets (Euro pean Central Bank, 2009). Economic and Monetary Union (EMU) EMU was set up with the motive of stabilising the monetary operations as well as for prosperous economic development of the European nations. The vision of EMU is to develop an integrated framework for the financial sectors which enables the banking