Contents
- Video - The Crisis of Credit Visualized
- Slideshow - Sub-Prime and Credit Crisis, how it all happened
- Link - Eurozone Crisis Interactive Timeline
- Article - Unfolding the eurozone crisis
- Video - Eurozone Crisis Explained
- Video - Eurozone Crisis 'threat' to global economy
- Video Link - Eurozone Crisis worries Singapore
- Students' Reflections
Eurozone crisis interactive timeline - LINK
Unfolding the Eurozone crisis
Eurozone crisis
The euro, the dream of many a politician in the years following World War II, was established in Maastricht by the European Union (EU) in 1992.
To join the currency, member states had to qualify by meeting the terms of the treaty in terms of budget deficits, inflation, interest rates and other monetary requirements.
Of EU members at the time, the UK, Sweden and Denmark declined to join the currency.
Since then, there have been many twists and turns for the countries that use the single currency.
1999
On 1 January, the currency officially comes into existence.
2001
Greece joins the euro.
2002
On 1 January, notes and coins are introduced.
2008
Malta and Cyprus join the euro, following Slovenia the previous year.
In December, EU leaders agree on a 200bn-euro stimulus plan to help boost European growth following the global financial crisis.
2009
Slovakia joins the euro.
In April, the EU orders France, Spain, the Irish Republic and Greece to reduce their budget deficits - the difference between their spending and tax receipts.
Greece is burdened with debt amounting to 113% of GDP - nearly double the Eurozone limit of 60%. Ratings agencies start to downgrade Greek bank and government debt.
2010
On 11 February, the EU promises to act over Greek debts and tells Greece to make further spending cuts. The austerity plans spark strikes and riots in the streets.
Greek borrowing costs reach yet further record highs. The EU announces that the Greek deficit is even worse than thought after reviewing its accounts - 13.6% of GDP, not 12.7%.
Finally, on 2 May, the eurozone members and the IMF agree an 110bn-euro bailout package to rescue Greece.
The euro continues to fall and other EU member state debt starts to come under scrutiny, starting with the Republic of Ireland.
In November, the EU and IMF agree to a bailout package to the Irish Republic totalling 85bn euros. The Irish Republic soon passes the toughest budget in the country's history.
2011
On 1 January, Estonia joins the euro, taking the number of countries with the single currency to 17.
In February, eurozone finance ministers set up a permanent bailout fund, called the European Stability Mechanism, worth about 500bn euros.
In May, the eurozone and the IMF approve a 78bn-euro bailout for Portugal.
A second bailout for Greece is agreed. The eurozone agrees a comprehensive 109bn-euro ($155bn; £96.3bn) package designed to resolve the Greek crisis and prevent contagion among other European economies.
In August, European Commission President Jose Manuel Barroso warns that the sovereign debt crisis is spreading beyond the periphery of the eurozone..
The European Commission predicts that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011, growing just 0.2% and putting more pressure on countries' budgets.
That same day, in its World Economic Outlook, the IMF cuts growth forecasts and warns that countries are entering a 'dangerous new phase'.
On 6 October the Bank of England injects a further £75bn into the UK economy through quantitative easing, while the European Central Bank unveils emergency loans measures to help banks.
On 21 October eurozone finance ministers approve the next, 8bn euro ($11bn; £7bn), tranche of Greek bailout loans, potentially saving the country from default.
2012
On February 23RD the European Commission predicts that the eurozone economy will contract by 0.3% in 2012.
March begins with the news that the eurozone jobless rate has hit a new high.
On 13 March, the eurozone finally backs a second Greek bailout of 130bn euros. IMF backing was also required and was later given.
Attention shifted to Spain the next day, with shares hit by worries over the country's economy and the Spanish government's 10-year cost of borrowing rose back towards 6% - a sign of fear over the country's creditworthiness.
On 18 April, the Italian government cut its growth forecast for the economy in 2012. It was previously predicting that the economy would shrink by 0.4%, but is now forecasting a 1.2% contraction.
On 6th September, the European Central Bank (ECB) announced that it would launch an unlimited but sterilized bond-buying program. Sterilizing the purchases means that the central bank would offset bond purchases by taking money out of circulation to avoid increasing the money supply. Under the new plan, the ECB will buy sovereign debt from countries that formally request bailouts. Continued aid will be conditional on adherence to strict budget requirements.
On 18th October, following a summit of European Union leaders, it was announced that the European Central Bank would lead supervision of the eurozone's 6,000 banks.
On 7th November, the European Commission presents its autumn forecasts, depicting a gradual return to GDP growth in 2013 for the EU economy and showing a large improvement in the budgetary situation of many Member States. Spain, however, is forecast to largely overshoot its targets. The Greek Parliament passes a new austerity package and the 2013 budget, comprising €13,5bn in new consolidation measures, in order to satisfy the conditions for the next aid tranche.
2013
On 7th February, Ireland officially announces that it has reached an agreement with the European Central Bank on restructuring its promissory notes. These notes, used to shore up Irish banks in 2010, had left the state saddled with large repayment obligations over the following decade.
On 22nd February, the latest Commission forecasts show that France, the Netherlands and Slovenia are unlikely to meet their 3 per cent of GDP deficit targets in 2013, despite large adjustment efforts.
On 9th May the ECB and IMF concluded that Ireland’s economic adjustment programme is on track.
From 21st to 31st May a delegation from the European Commission along with ECB carried out the 3rd review of the financial assistance programme for Spain
12th Sep –ECB welcomes vote by the European Parliament on legislation which paves the way for establishing a banking Union.
During the month of Nov and Dec delegation from the European Commission in liaison with ECB, carried out review missions for Ireland ,Cyprus,Greece ,Spain,Portugal,
2014
Jan 2014 -European Central Bank president Mario Draghi has warned that Europe's recovery remains fragile, and renewed the pressure on European leaders to make structural reforms. Much of the recovery is based on exports, he added, while jobless rates have not yet fallen from their record highs. The youth unemployment levels in some countries show the need to reform labour markets and increase competitiveness.
The euro, the dream of many a politician in the years following World War II, was established in Maastricht by the European Union (EU) in 1992.
To join the currency, member states had to qualify by meeting the terms of the treaty in terms of budget deficits, inflation, interest rates and other monetary requirements.
Of EU members at the time, the UK, Sweden and Denmark declined to join the currency.
Since then, there have been many twists and turns for the countries that use the single currency.
1999
On 1 January, the currency officially comes into existence.
2001
Greece joins the euro.
2002
On 1 January, notes and coins are introduced.
2008
Malta and Cyprus join the euro, following Slovenia the previous year.
In December, EU leaders agree on a 200bn-euro stimulus plan to help boost European growth following the global financial crisis.
2009
Slovakia joins the euro.
In April, the EU orders France, Spain, the Irish Republic and Greece to reduce their budget deficits - the difference between their spending and tax receipts.
Greece is burdened with debt amounting to 113% of GDP - nearly double the Eurozone limit of 60%. Ratings agencies start to downgrade Greek bank and government debt.
2010
On 11 February, the EU promises to act over Greek debts and tells Greece to make further spending cuts. The austerity plans spark strikes and riots in the streets.
Greek borrowing costs reach yet further record highs. The EU announces that the Greek deficit is even worse than thought after reviewing its accounts - 13.6% of GDP, not 12.7%.
Finally, on 2 May, the eurozone members and the IMF agree an 110bn-euro bailout package to rescue Greece.
The euro continues to fall and other EU member state debt starts to come under scrutiny, starting with the Republic of Ireland.
In November, the EU and IMF agree to a bailout package to the Irish Republic totalling 85bn euros. The Irish Republic soon passes the toughest budget in the country's history.
2011
On 1 January, Estonia joins the euro, taking the number of countries with the single currency to 17.
In February, eurozone finance ministers set up a permanent bailout fund, called the European Stability Mechanism, worth about 500bn euros.
In May, the eurozone and the IMF approve a 78bn-euro bailout for Portugal.
A second bailout for Greece is agreed. The eurozone agrees a comprehensive 109bn-euro ($155bn; £96.3bn) package designed to resolve the Greek crisis and prevent contagion among other European economies.
In August, European Commission President Jose Manuel Barroso warns that the sovereign debt crisis is spreading beyond the periphery of the eurozone..
The European Commission predicts that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011, growing just 0.2% and putting more pressure on countries' budgets.
That same day, in its World Economic Outlook, the IMF cuts growth forecasts and warns that countries are entering a 'dangerous new phase'.
On 6 October the Bank of England injects a further £75bn into the UK economy through quantitative easing, while the European Central Bank unveils emergency loans measures to help banks.
On 21 October eurozone finance ministers approve the next, 8bn euro ($11bn; £7bn), tranche of Greek bailout loans, potentially saving the country from default.
2012
On February 23RD the European Commission predicts that the eurozone economy will contract by 0.3% in 2012.
March begins with the news that the eurozone jobless rate has hit a new high.
On 13 March, the eurozone finally backs a second Greek bailout of 130bn euros. IMF backing was also required and was later given.
Attention shifted to Spain the next day, with shares hit by worries over the country's economy and the Spanish government's 10-year cost of borrowing rose back towards 6% - a sign of fear over the country's creditworthiness.
On 18 April, the Italian government cut its growth forecast for the economy in 2012. It was previously predicting that the economy would shrink by 0.4%, but is now forecasting a 1.2% contraction.
On 6th September, the European Central Bank (ECB) announced that it would launch an unlimited but sterilized bond-buying program. Sterilizing the purchases means that the central bank would offset bond purchases by taking money out of circulation to avoid increasing the money supply. Under the new plan, the ECB will buy sovereign debt from countries that formally request bailouts. Continued aid will be conditional on adherence to strict budget requirements.
On 18th October, following a summit of European Union leaders, it was announced that the European Central Bank would lead supervision of the eurozone's 6,000 banks.
On 7th November, the European Commission presents its autumn forecasts, depicting a gradual return to GDP growth in 2013 for the EU economy and showing a large improvement in the budgetary situation of many Member States. Spain, however, is forecast to largely overshoot its targets. The Greek Parliament passes a new austerity package and the 2013 budget, comprising €13,5bn in new consolidation measures, in order to satisfy the conditions for the next aid tranche.
2013
On 7th February, Ireland officially announces that it has reached an agreement with the European Central Bank on restructuring its promissory notes. These notes, used to shore up Irish banks in 2010, had left the state saddled with large repayment obligations over the following decade.
On 22nd February, the latest Commission forecasts show that France, the Netherlands and Slovenia are unlikely to meet their 3 per cent of GDP deficit targets in 2013, despite large adjustment efforts.
On 9th May the ECB and IMF concluded that Ireland’s economic adjustment programme is on track.
From 21st to 31st May a delegation from the European Commission along with ECB carried out the 3rd review of the financial assistance programme for Spain
12th Sep –ECB welcomes vote by the European Parliament on legislation which paves the way for establishing a banking Union.
During the month of Nov and Dec delegation from the European Commission in liaison with ECB, carried out review missions for Ireland ,Cyprus,Greece ,Spain,Portugal,
2014
Jan 2014 -European Central Bank president Mario Draghi has warned that Europe's recovery remains fragile, and renewed the pressure on European leaders to make structural reforms. Much of the recovery is based on exports, he added, while jobless rates have not yet fallen from their record highs. The youth unemployment levels in some countries show the need to reform labour markets and increase competitiveness.
Eurozone crisis worries Singapore - video link
Students' refections
The Euro Crisis Aftermath
Germany has, in the aftermath of the crisis, insisted on wage restraints, de-regulated labour markets, tougher fiscal rules and structural reforms limiting government’s structural borrowing to 0.5% of their economies’ annual output. However, this begs the question of the long term effectiveness of these policies; As a borrowing limit had been established from the onset (3% in 1997 when the Euro was first set up), and been ignored time and time again, who is to say the big players will keep to their promises? And even if they do, it was not government debt but in fact private sector debt that had cumulated in the Crisis (Greece was an anomaly) as they borrowed alarmingly more than they were able to return. Perhaps a more prudent solution would be to concurrently promote the efficiency of private sector businesses, reducing their reliance on loans and increasing output in the long run; preventing the occurrence of a similar crisis. Appropriate management of this is crucial even to us here in Singapore because as global trade has increased over the past decade, and any unfavorable fluctuations or decline in their national income would definitely affect demand for Singapore’s exports. What’s more is that Singapore, being a very open economy, is especially vulnerable to such crises, making us Singaporeans have a cause to worry about the current situation."
Tammie Khor
1336
Reflection on US Debt Crisis
For sixteen days, the US government went into an unneeded partial shutdown, while the rest of the world was left worrying about whether the US would be able to raise its debt ceiling in time to repay its foreign-owned debt. This was the last thing economies worldwide needed to fear at a time when most of them are still recovering from the Great Recession, especially since the US supplies the world’s leading reserve currency.
What this crisis showed is how economies are increasingly interlinked, as a petty dispute between Democrats and Republicans resulted in a government standstill that could have caused another global crisis. Unfortunately, such scares are now commonplace as both parties are increasingly unwilling to work together. Congress needs to learn how to display bipartisanship and sacrifice political agendas for practical governance, but given the increasing polarisation of American politics, we can only brace ourselves for future scares.
Ashley Tan
1336
Germany has, in the aftermath of the crisis, insisted on wage restraints, de-regulated labour markets, tougher fiscal rules and structural reforms limiting government’s structural borrowing to 0.5% of their economies’ annual output. However, this begs the question of the long term effectiveness of these policies; As a borrowing limit had been established from the onset (3% in 1997 when the Euro was first set up), and been ignored time and time again, who is to say the big players will keep to their promises? And even if they do, it was not government debt but in fact private sector debt that had cumulated in the Crisis (Greece was an anomaly) as they borrowed alarmingly more than they were able to return. Perhaps a more prudent solution would be to concurrently promote the efficiency of private sector businesses, reducing their reliance on loans and increasing output in the long run; preventing the occurrence of a similar crisis. Appropriate management of this is crucial even to us here in Singapore because as global trade has increased over the past decade, and any unfavorable fluctuations or decline in their national income would definitely affect demand for Singapore’s exports. What’s more is that Singapore, being a very open economy, is especially vulnerable to such crises, making us Singaporeans have a cause to worry about the current situation."
Tammie Khor
1336
Reflection on US Debt Crisis
For sixteen days, the US government went into an unneeded partial shutdown, while the rest of the world was left worrying about whether the US would be able to raise its debt ceiling in time to repay its foreign-owned debt. This was the last thing economies worldwide needed to fear at a time when most of them are still recovering from the Great Recession, especially since the US supplies the world’s leading reserve currency.
What this crisis showed is how economies are increasingly interlinked, as a petty dispute between Democrats and Republicans resulted in a government standstill that could have caused another global crisis. Unfortunately, such scares are now commonplace as both parties are increasingly unwilling to work together. Congress needs to learn how to display bipartisanship and sacrifice political agendas for practical governance, but given the increasing polarisation of American politics, we can only brace ourselves for future scares.
Ashley Tan
1336