Feed: CNN.com - WORLD
Posted on: Wednesday, December 07, 2011 4:36 PM
Author: CNN.com - WORLD
Subject: Is this make or break for euro?
The euro launched a decade ago amid much fanfare. But ever since then, critics have warned that its flaws would eventually be exposed when the boom years came to an end. |
The rise and fall of the euro
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- Europe commissioner says just 10 days left to find solution to crisis
- Many said one fiscal system could never work for 17 countries and 300 million people
- Crisis exploded after Greece admitted 2009 budget deficit would be 12.7% of GDP
London (CNN) -- Just one decade after the European single currency was launched amid fanfare and fireworks, its future is now in doubt as the debt crisis that has engulfed Greece, Ireland and Portugal threatens the entire bloc.
As European leaders prepare to meet in Brussels Friday for a summit aimed at hammering out a solution, Olli Rehn, Europe's commissioner for economic and monetary affairs, last week warned there were just 10 days left to solve the crisis.
And unless the politicians reach a consensus, many economists believe there is a serious risk the eurozone crisis could trigger a global slump. Some even go further -- Alain Juppe, ex-French prime minister, told French media last week that the crisis "raises the spectre of a return to violent conflict on our continent."
Many analysts saw it all coming of course, arguing that one fiscal system could never work for 17 countries and more than 330 million people.
Euro crisis: How we got here 
How euro can be saved The flaws were exacerbated after some countries were suspected of fudging their numbers, including Greece which in 2004 admitted it gave misleading information to gain admission to the eurozone. The crisis exploded after Greece revised its figures to show its 2009 budget deficit would be 12.7% of gross domestic product -- far higher than the eurozone limit of 3%.
The bloc -- whose financial fractures may not have been apparent during the boom years -- then began to unravel.
After Greece's dire numbers were revealed, investors panicked and the country was unable to raise money to fund itself. The country was forced to take a â'¬110 billion bailout from its eurozone peers and the International Monetary Fund.
But Greece's bailout, rather than stemming the panic, served as a harbinger to the debt crisis.
The European Financial Stability Facility, or European bailout fund -- set up to deal with further financial stumbles --- was quickly tapped again.
Ireland, felled by a black hole in its banking system, was forced to take a â'¬67.5 billion bailout package in November 2010. After the markets then closed their doors to Portugal, it was also forced to take a â'¬78 billion bailout.
The troubled nations implemented austerity measures to try and rein in their hefty piles of debt, but confidence in the bloc's ability to stabilize itself continued to fall.
The crisis is now threatening to engulf Italy, which makes up 17% of the eurozone economy -- compared to Greece, Ireland and Portugal which make up less than 6% between them.
And so Europe's politicians and officials have desperately tried to sort out the mess by coming up with ideas including boosting the bailout fund, bringing the disparate economies closer financially, and tapping other markets for funds.
Their measures to date have proved ineffective, as the markets --- and the world --- remain unconvinced at the bloc's ability to survive in its current form. And so they face another make-or-break meeting.
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