What is the Eurozone?
The Eurozone is a collection of countries in Europe who all use the same currency – the Euro. It came to existence in 1999 with 11 countries opting in, now there are 17 member countries. The Eurozone does not contain all members of the European Union and its monetary rules are controlled by the European Central Bank. The most recent country to join the Eurozone was Estonia in 2011.
The Eurozone Crisis
The main cause was that the PIGS (Portugal, Italy, Greece, Spain) had lost control of their finances since the global recession – borrowing and spending more than they could realistically afford. Because of this, the other European countries had to bail them out costing billions of dollars. Greece was the first country to accept bailout money in May 2010, followed by Ireland and Portugal. However, this money was doing nothing to help their economies because they were trying to pay off loans, contributing to their debt crises, of a infinitesimal percentage. For these countries, the issue is is that if they have to keep repaying off loans to other countries they could effectively go bankrupt, which could have an even greater adverse effect on Europe, their economy and citizen spending power.
The Eurozone is a collection of countries in Europe who all use the same currency – the Euro. It came to existence in 1999 with 11 countries opting in, now there are 17 member countries. The Eurozone does not contain all members of the European Union and its monetary rules are controlled by the European Central Bank. The most recent country to join the Eurozone was Estonia in 2011.
The Eurozone Crisis
The main cause was that the PIGS (Portugal, Italy, Greece, Spain) had lost control of their finances since the global recession – borrowing and spending more than they could realistically afford. Because of this, the other European countries had to bail them out costing billions of dollars. Greece was the first country to accept bailout money in May 2010, followed by Ireland and Portugal. However, this money was doing nothing to help their economies because they were trying to pay off loans, contributing to their debt crises, of a infinitesimal percentage. For these countries, the issue is is that if they have to keep repaying off loans to other countries they could effectively go bankrupt, which could have an even greater adverse effect on Europe, their economy and citizen spending power.