The European debt crisis or European sovereign debt crisis is the financial crisis that startedin Eurozone in late 2009 and is still on-going. One after the other, countries in Eurozone isfinding it difficult to re-finance their debts (government debt).
From late 2009, fears of a sovereign debt crisis developed among investors as a result of the rising private and government debt levels around the world together with a wave of downgrading of government debt in some European states. Causes of the crisis varied bycountry. In several countries, private debts arising from a property bubble were transferredto sovereign debt as a result of banking system bailouts and government responses toslowing economies post-bubble. In Greece, unsustainable public sector wage and pensioncommitments drove the debt increase. The structure of the Eurozone as a monetary union(i.e., one currency) without fiscal union (e.g., different tax and public pension rules)contributed to the crisis and impacted the ability of European leaders to respond. Europeanbanks own a significant amount of sovereign debt, such that concerns regarding thesolvency of banking systems or sovereigns are negatively reinforcing. Concerns intensified inearly 2010 and thereafter, leading Europe's finance ministers on 9 May 2010 to approve a
rescue package worth €750
billion aimed at ensuring financial stability across Europe bycreating the European Financial Stability Facility (EFSF)
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