IFM- GROUP 9

PRESENTERS
1. RESHMA JAYAKUMAR
2. SISIRA SIVAN
3. SOOSANA JOY
4. SRUTHI RAMACHANDRAN
5. SRUTHI SRINIVASAN
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RECENT DEVELOPMENTS IN EURO
MARKET

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 EURO MARKET
 The Euro market can be defined in both the micro as
well as the macro perspective.
 In the micro perspective, the Eurocurrency market is
basically a money market which functions in many
financial centres around the globe.
 Eg: A US Dollar deposited in a Singapore Bank is
Eurocurrency, or a Eurodollar deposit.

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 In the macro perspective, the Euro market is a
single market of the EU allowing free trade of g&s
without restrictions/internal borders.
 The 28 member countries of the EU share a
common trade policy with the non-EU countries.

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 Major Developments in the Euro Market
1. Petrodollars : Organization of the Petroleum
Exporting Countries (OPEC)
2. Single European Act
3. Syndicated Eurocurrency Loans
4. Depository Receipts
5. Basel Accord

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Basel I
Basel II
Basel III
6. Electronic Innovations such as MTS and
Broker-Tec as well as increased mergers and
acquisitions.

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 BREXIT
 Abbreviation for BRITISH EXIT.
 Decision to leave European Union
 European Union-
 Unique economic partnership between 28 European countries
 Formed in 1993 to achieve economic and political integration
 Aims to provide greater harmony amongst Western European countries

 June 23, 2016 referendum.

 Boris Johnson, former London Mayor supported BREXIT.

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 History of European Union

EEC(1957)
Need for an (UK joined in Introduction
alliance(1945) 1973) of Euro(2002)

ECSC(1951) EU(1993)

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 UK, never truly a part of Euro Zone…
 Stood apart from Hitler dominated Europe from 1940.
 Did not sign the Treaty of Rome,1957.
 Maastricht Treaty of 1992 signified its semi detached status.
 Believed in divide and rule policy.
 Determined to escape the European Economic Committee’s external tariff against
British goods.
 Favoured strengthening of political ties but the referendum stated that it had no
political implications with respect to the European Union.
 50% membership declined to almost 30% in 2010.

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 Contents of Withdrawal Agreement
 Money to be paid to break the partnership.
 Consequences to British living somewhere in EU and vice versa.
 Terms and conditions regarding the transition period.
 Guidelines on how to avoid the existence of a physical border
between Northern Ireland and Republic of Ireland when it becomes a
frontier between the UK and the EU.

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 Why Pound and not Euro?
PROS
i. Reduced exchange rate risks.
ii. Peaceful cooperation and
division of labour.
iii. Wider acceptability.
iv. Reduced transactional costs.
v. Free and easy movement of
goods and services.
vi. Increased comparative
advantage.
CONS
i. Limits freedom of choice for
citizens.
ii. Not based on a real standard.
iii. Dangers of discretionary
monetary issues, still exist.
iv. Massive centralization of
decisions, favourable to Euro
zone.
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 Why Brexit?
 Intense interference by European Union.
 UK taxpayers’ money goes to EU(14.5 billion pounds, an year).
 EU regulations cost almost 600 million pounds, every week.

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 Trade Agreements after Brexit
 The White Paper proposes the creation of a free trade for goods with third
world countries.

 Avoids the need for customs and regulatory checks at the border.
 The products are subject to only a set of approvals and authorizations
before being sold.

 The U.K. will follow EU single market rules when it comes to goods.
 The countries that maintain similar relationship with EU are Norway,
Switzerland, Canada, and World Trade Organization members.

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 IMPACTS OF BREXIT
 1 out of 10 jobs in UK are linked to trade with the EU  Brexit
affects these jobs directly/indirectly.
 61% of UK small businesses go to EU Free trade, no
tariffs/barriers, help businesses in UK to grow and create jobs 
affected.
 Leads to lower GDP of 2.2% in 2030.
 Lower trade between UK and EU generates complications.
 Affects FDI, immigration and economic regulations in UK.
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 IMPACT ON TRADE
 Trading freely with the European Union allows UK businesses
to grow and creates jobs – risk.
 4 out of 5 small businesses in UK consider access to EU
important for future growth - suffer losses
 70% of major businesses (FTSE 350 firms – some of largest
UK companies) expect damage if UK leaves EU.
 TTIP(Transatlantic Trade & Investment Partnership) deal
between US and UK will not benefit UK if it leaves EU.
 CETA (The Comprehensive Economic & Trade agreement)
between Canada & EU will not benefit UK if Brexit happens.
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 IMPACT ON SOCIETY
 Being in EU  Lower prices for UK families Cheaper to trade
more choice.

 If UK left EU, Cost of imports would rise by atleast 11 Billion £.

 Experts estimate the benefits of being in EU  £ 3,000 a year to the

average UK household due to low prices, jobs, trade and investment 
lost if UK leaves EU.
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GREECE BANKRUPTCY

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 GREEK DEBT CRISIS
 Biggest economic bailout
 Debt owed to the European Union
 Between 2008 to 2018
 2010: EU and IMF stepped in
 Help of $146 billion
 Eurozone countries and IMF to the rescue
 Threatened the viability of Eurozone itself

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 Causes
 2001 Greece adopts Euro as it's currency
 Had been an EU member since 1981
 Couldn't enter EUROZONE : Mastricht criteria
 2004 confessed the lies
 still NO sanctions imposed: France and Germany
 Debt continued till 2008
 olympics and corruption

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 THE CRISIS IN DETAIL
 First indications in 2009
 Budget deficits exeeded 15% of GDP
 Fear of default : 10 year Bond
 Credit worthiness would fall
 Rate fell by 35%
 EU reluctant to forgive loans
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 Continued...
 Austerity Measures
 Tax increase further aggrieved the situation
 Recession by the end of 2017
 This Cris triggered the Eurozone crisis
 January 2019 41.6 billion Euros repaid
 To fully repay beyond 2060



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 Austerity measures
 Lead by Germany
 Increat VAT and corporate taxes
 Improve management of public finances
 Modernise public statistics and reporting
 Lower trade barriers
 PENSION REFORMS: was17.5% of GDP
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 Impact
 High dependency on pensions .,50%
 Cut public spending and increase taxes
 Costed 72 billion Euros
 Economy shrank and unemployment rose: 25%
 People took to the streets
 People started fleeing


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German dominance in euro system

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 The effect of the Brexit will be felt beyond the United
Kingdom
 The exit of a key member- strong impact upon the EU-
internal distribution of power and influence
 Brexit provides Germany and France an opportunity to play
a vital role
 German will prevail in various EU policy
 The forces in Germany to perform delicate balancing act
between this group closer to its own policy preference.

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 Resulting in joint Franco- German initiatives and policy
brokerage
 Germany helps to shape the EU policies in key political
economy domains
 Germany’s growing made more responsibility in politics
including security and defence (PESCO projects)
 France and Germany are likely to lead in initiatives to
deepen cooperation with the member states.

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The three pre conditions for a renewed Franco-German role in
the pre-Brexit EU are as follows:
 The German public and political elite would have to
subscribe to the idea of Germany taking on more
responsibility regionally and internationally along with the
associated risks and costs.
 The French president face many obstacles on fixing the
economic and social model.
 Thirdly, the leaders need followers. If they want to prevent
the scenario – coordinate the small member states and avoid
any exclusive form of bilateralism.
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THANK YOU

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