Brussels Response to Euro Debt Crisis

Radhika .K International Business Enviornment

in consultation with the 27 that constitute the EEC. outlined a multiple and simultaneous approach plan.Introduction Gathered at the Brussels Summit. the presidents of the 17 countries that constitute the Euro-Zone. which has three fundamental pillars: 1) The banking recapitalization 2)The Greek debt’s restructuring 3)The expansion of the Greek rescue fund (EFSF) .

 Before the end of the year. it is the national supervisor’s role to offer the resources and. the European rescue fund’s.  If any bank is unable to finance itself independently. ultimately.Banking recapitalization The idea is that the banks themselves can come up with the necessary capital to reach the minimums set by the European Banking Authority (EBA). entities must inform their national supervisors of the way in which they plan on gathering the funds they are missing in order to reach the set minimum.  .

 The new discharge. exceeds the 21% agreed the past 21st of July during the previous European meeting. .The Greek debt’s restructuring  The heads of state have agreed to forgive 50% of the Greek debt. which will be voluntary. This agreement took place at the very last minute.

 A number with which the EU will have to face the banking recapitalization of those countries that cannot face it by themselves.Expansion of the Greek rescue The European Union has decided that this plan’s amount should rise to a billion Euros. or the purchase and/or bonds guarantee in the secondary market for those countries that should suffer the harassment to their national debt  .

 This way.  In parallel. . this prevents the ECB from buying debt. using resources from the IMF and from emerging countries. an action that does not satisfy Germany. Brussels will work to increase the EFSF. especially China.

. to an economic recession and a social tragedy. the solution formed in Brussels would be avoiding the Greek default and the European financial system’s collapse.Conclusion In the short term. Its current undercapitalization level and the toxicity of its balance would have inexorably led to credit freeze and. . therefore.

they all face.Problem What still remains unclear is how to face the tax crisis and the indebtedness that challenges several countries of the Euro zone from there on. to different extents. Besides. employment and austerity levels in public expenditure . except for Germany. serious competitiveness issues. which demands great efforts in terms of wage.

Thank you .