The Debt Crisis Of The United State Essay
European sovereign debt crisis triggered by the financial crisis of America swept across whole European countries. Why the Eurozone is too weak to resist the crisis? Are there any problems of the Eurozone? The sovereign debt crisis has spilled over to the banks, which increases the credit risk exposure of the banks. It is necessary for us to understand how the crisis impacts banks’ exposure and what are the reactions of the banks with respect to their capital provision. Finally, what those policymakers within the region or around the world do in order to underpin European and global financial stability?
Background of the EU sovereign debt crisis.
Subprime mortgage crisis of the United State had a negative impact on the global economy and financial stability, which further caused the EU sovereign debt crisis. In addition, three world-famous rating agencies turned down the sovereign credit rating of the EU countries, which accelerate the deterioration of the crisis. Moreover, hedge fund made waves over the debt crisis, which increased the cost and reduced the stability of funding.
Economic structural defects
The economies among the regions are not equally developed. For example, some Eurozone core countries like Germany, Italy and France are more advanced than those peripheral countries like Greece, Ireland. Specifically, Germany 's GDP accounts for 20% of the total GDP of the euro area, Germany, France and Italy accounted…