How Italian Crisis Shows the Fragility of the Europe Single Currency
May 30, 2018 10:41 am
Joseph Stiglitz is one of the most respected economists in the world. He currently teaches Columbia University and is also one of the few economists to receive the Nobel Memorial Prize in Economic Sciences. Joseph Stiglitz has published multiple books on economics. In 2016, he published a book on Europe and the risks posed by a common currency. He argued that while the euro was intended to propel the EU into economic prosperity like the dollar did for the United States, the currency had instead led to more risks for the continent.
After he published the book, Europe has moved from crisis to crisis. In 2015, the EU countries faced a problem on Grexit. This was a problem caused by the increased debt by the Greek economy. After years of increased low-cost borrowing, the country was unable to pay its creditors who included the International Monetary Fund (IMF) and the EU. The problem has not ended, and more EU members have unsustainable debt to GDP ratios.
After that, the biggest blow came in 2016, when the United Kingdom (UK) held its Brexit vote. The country voted narrowly to leave the EU. It is expected to exit completely in 2019. The exit by the UK was a big blow because of the role the country had in the region. It had the second largest GDP after Germany.
After Brexit, many thought that Europe was out of problem. As shown in the chart below, after months of declines, the euro rebounded in 2017 and ended the year higher than its peer currencies.
Joseph Stiglitz is one of the most respected economists in the world. He currently teaches Columbia University and is also one of the few economists to receive the Nobel Memorial Prize in Economic Sciences. Joseph Stiglitz has published multiple books on economics. In 2016, he published a book on Europe and the risks posed by a common currency. He argued that while the euro was intended to propel the EU into economic prosperity like the dollar did for the United States, the currency had instead led to more risks for the continent.
After he published the book, Europe has moved from crisis to crisis. In 2015, the EU countries faced a problem on Grexit. This was a problem caused by the increased debt by the Greek economy. After years of increased low-cost borrowing, the country was unable to pay its creditors who included the International Monetary Fund (IMF) and the EU. The problem has not ended, and more EU members have unsustainable debt to GDP ratios.
After that, the biggest blow came in 2016, when the United Kingdom (UK) held its Brexit vote. The country voted narrowly to leave the EU. It is expected to exit completely in 2019. The exit by the UK was a big blow because of the role the country had in the region. It had the second largest GDP after Germany.
After Brexit, many thought that Europe was out of problem. As shown in the chart below, after months of declines, the euro rebounded in 2017 and ended the year higher than its peer currencies.
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