Question

Question 3:

Explain the origin of what triggered the financial crisis in Greece and how this could have caused contagion effects throughout Europe had not proper intervention taken place. Is the crisis finally over?

Answer 1

The origin which triggered the Financial crisis in Greece is that debt crisis which severely effected the economic growth and development of the country. The effect of the debt crisis pointed to the unemployment and also exchange rate of that region.The government failed to implement the strategies which can bear the effect of the crisis.

The effects of Greece exit from the Euro Group not only effect the 17 countries of Euro but also Greece as the debt crisis are more now the Greece has to pay its debt in other than the local currency of the Greece which is drachma, more ever the value of the currency is low then it has to pay higher amount which effects its economy.

As we are aware of US crisis which caused the recession as lenders unable to recover the loans from the borrower. In the same way if the currency is devalued it would be difficult for the borrower to repay the debt.

If Greece able to recover the crisis early and turned to positive economy then this situation prompts other euro countries to exit which effects the global market.