What is Eurozone Crisis? Causes and Consequences of Eurozone Crisis

The Eurozone Crisis is a complex issue. It has caused damage to the entire Euro Zone and has affected each and every member state in different ways. We aim to identify and summarize some of the key factors that led to this crisis and its consequences.

The European Union has had to take a number of important economic and financial reforms to deal with the crisis. These have been the subject of various summits and discussions. All three strands of the Economic and Monetary Union have been involved in these reforms.

One of the major causes of the eurozone crisis was a lack of common monetary policy. As a result, there was a divergence in economies between member states. This divergence was reinforced by attempts to converge the economy by adopting a single currency and deregulation.

Another notable feature of the Euro was the low-interest rate. Combined with low inflation, this allowed for massive debt in some countries.

Another notable effects of the euro were the abolition of customs duties, which allowed for free movement of goods. But this did not equate to a boom in the economy. Instead, it was a symptom of the deep recession which affected the peripheral countries.

A third important cause of the Eurozone crisis was the lack of cooperation among member states. Moreover, the lack of a coherent and coordinated strategy to counter the crisis has caused conflicting policies on how to respond.