Professional paper

The Crisis of the Euro - 2010.

Mate Babić

Abstract

European economic integration began in the early 1950's then passed through several phases until it reached the highest degree of integration – the European Economic and Monetary Union. The new currency, the Euro, was introduced on January 1, 1999 and thus integration was achieved. The introduction of the new currency marked the realization of the optimum currency area theory. Expectations were high. Unfortunately, very soon divergences in fiscal policies among countries proved greater than expected. Divergences of fiscal policies with incomplete freedom of movement of labour force resulted in balance of payments deficits of some countries and finally in the crisis of the Euro which started in Greece in 2010 and spread to Ireland. The danger exists that it will spread even further.

Keywords

optimum currency area; fiscal consolidation; financial crisis; deflation; devaluation

Hrčak ID:

67993

URI

https://hrcak.srce.hr/67993

Publication date:

2.6.2011.

Article data in other languages: croatian

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