The Problem with the Euro
From 1869 until 2002, Spain’s currency was the peseta, but in 2002, Spain adopted the euro in order to make travel between European countries easier.
When Spain adopted the euro, it increased trade and investment with other european countries and liberalized the market of Spain. That is to say, at first, the transition brought many benefits, but these benefits encouraged high-risk loans and borrowing because the Spanish think that they can pay the credit in the future due to success in the euro. The debts of countries like Spain and Greece have caused problems with the European Union because rich countries like Germany want to leave EU because rich countries want to avoid an economic crisis if the euro falls much in value. At this moment, the euro has fallen in value because many economies of Europe are in crisis in the “eurozone” and Germany grows more nervous because the euro will suffer great inflation if the crisis worsens. Therefore, the problems with the euro have contributed to the economic crisis in Europe as the euro debt had caused more dissension within the EU. |
Reference:
http://www.economist.com/blogs/freeexchange/2013/06/euro-crisis
http://www.economist.com/blogs/freeexchange/2013/06/euro-crisis