The Global Financial Crisis Of 2007 / 8 - 2872 Words

BMAN20340 T Ngoasheng 9179260 Since the global financial crisis of 2007/8 many European countries have been struggling to recover their economies and regain economic stability. Since the crisis we have seen several Eurozone countries go into administration and be bailed out by financial institutions and other countries, however these attempts to regain stability in the Eurozone have not worked as effectively as many governments and central banks had hoped. On the 4th of September 2014 the European Central Bank (ECB) cut its benchmark interest rate to 0.05%. It will also launch an asset purchase programme, which will buy debt products from banks, the asset purchasing programme more commonly known as Quantitative Easing (QE). Using†¦show more content†¦This lead to the American government having to bail out many banks and the financial crisis spreading to other parts of the global economy such as the Eurozone. Due to the establishment of the European Union(EU) and its currency the Euro, many European coun tries became close financially intertwined through lending and borrowing from one another but also through the decline of trade barriers and companies setting up offices in many different countries within the area(Jarvis, 2014). Although countries in the EU have adopted the same currency and monetary policies, their fiscal policies differ. Some countries such as Greece, Spain, Italy and Portugal already had quite a large amount of debt before the establishment of the EU and the 2007/8 Credit Crunch due to differences in Fiscal Policy countries views about taxation and government spending differed therefore these countries had a year on year government deficiet. When the credit crunch hit the eurozone many countries couldn’t pay one another back which saw the increase of countries having to be bailed out by financial institutions and other countries such as Germany which had very strict Fiscal policies in order to avoid economic collapse(Jarvis, 2014). These bail outs were onl y effective to a certain extent as quite a few countries within the eurozone are yet to fully recover from the 2007/8 Credit Crunch and it has in turn created a debt crisis