the eurozone and the economic crisis (power point)
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The Eurozone and the Economic Crisis
Polyxeni Nomikou (4100155)George Ritsos – Kokkinis (4110103)
Outline of presentation
• Introduction• The Eurozone's main strength and one major
weakness in overcoming the crisis • The opportunities of the EU to overcome the crisis• The Threat: the Price of Oil • Conclusion
What was the cause of the current Eurozone debt crisis?
The main cause was the global financial crisis in 2008.
The Strength: Euro Skepticism and Social Unrest
i) How did the crisis influence the public opinion on the role of the euro?
ii) How do Europeans find the prospect of economic reforms?
Has the euro in general cushioned the effects of the economic crisis?
EU 27
Eurozo
ne
Non-Eurozo
ne UK
Greece
Cypru
s0
5
10
15
20
25
30
35
40
45
50
Total Agree(in percentages%)
Autumn 2010 Spring 2011
EU 27
Eurozo
ne
Non-Eurozo
ne UK
Greece
Cypru
s0
10
20
30
40
50
60
70Total disagree(in percentages%)
Autumn 2010 Spring 2011
Which initiatives could most improve the performance of the European economy?
Improve education and proffesional training
Make it easier to set up a business
Reduce public debt and deficits
Invest in research and innovation
Use energy more efficiently
Strengthen regulation of financial markets
Make it easier for companies to access credit
Invest in enviromentally friendly products & services
Increase number of working hours
Increase retirement age
Invest in transport(railways etc.)
0 20 40 60 80 100 120 140 160
EU-27 Eurozone Non-Eurozone
(In percentages)
Which of the statements best reflects your household situation?
spring 2009 autumn 2009 spring 2010 autumn 2010 spring 2011
35% 35% 35% 34% 33%
29%32% 32% 32%31%28% 29% 30% 30%
1% 2% 1% 1% 2%4% 3% 3% 3%
unable to make future plans able to plan the next 6 months long-term perspective of household other
don’t know
The Weakness: The European Central Bank
December 2011: The ECB injected a great amount of liquidity into the financial system to avoid its collapse.
This had two main drawbacks.
I. Financial aid did not trickle down into society as expected.II. The ECB is funded by member states. A direct heavy toll
would pass on to nation states if a member state defaults on its sovereign debt.
He raised interest rates twice to control inflation and hampered economic growth.
He divided the ECB with his decisions and his bond purchasing policy.
Jean Claude Trichet(200
3-2011)
He took drastic measures by decreasing interest rates and reserve ratio.
He promoted the Fiscal Compact, an agreement to produce legislation that establishes disciplined macroeconomic policies.
Mario Draghi(2011-
present)
Notable ECB Presidencies
The Opportunities The main pillars of the recuperation effort
The Stability Pact:Member states agreed to work on a new fiscal pact tightening budget discipline. Member states from now on ‘should not be allowed to run fiscal budget deficits in good times, only in bad times.’
The Banking System:Necessary to prove that the banking system is healthy. The EU performed Stress Tests on European banks and discovered they needed a capital buffer of 115bn euros to be ready to face instability.
How did the EU reinforce the banking system? 1. Basel Accords
Three agreements developed by the Basel Committee on Banking Supervision including measures and reforms to strengthen the: regulationsupervision andrisk management of the banking sector.
These rules became law obliging in the EU in order to implement the Capital Requirement Directive.
2.Liquidity Coverage Ratio
The liquidity coverage ratio is an important part of the Basel Accords, as it defines the essential amount of liquid assets to be reserved by financial institutions.
The LCR aims at ensuring that banks have enough liquid assets to lend in normal times so that ‘central banks only perform as lenders of last resort’.
The Threat: the price of oil
The barrel of oil is priced in USD. That means that since the euro is weakened against the American dollar and the
price of oil rises , the European economy becomes more frail. However, social revolts and ongoing civil war in the Middle
East has made oil price fluctuate and has negatively affected the European economy.
Summary
Today we analyzed, The impact of the crisis on the public opinion concerning the
single currency and the need for economic reforms. The ECB and its efforts for economic recovery The opportunity to learn from the financial crisis The price of oil as a threat to the European recuperation
project
Thank you for your attention.
Any questions
Sources of Information
Lorca-Susino Maria .(2014). The Eurozone and The Economic Crisis: An Innovative Swot Analysis. Retrieved December 20, 2014, from http://www.addletonacademicpublishers.com
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