In 2012, Greece was in the middle of a debt crisis, and economic instability was spreading to other parts of the eurozone. The European Central Bank’s then-president Mario Draghi gave a speech that is now credited with saving the euro. A decade on, the euro and the eurozone are still intact. But one of the core issues at the heart of the crisis still remains. In fact, it rears its head every time the region comes under economic pressure.
In July 2012, the European Central Bank’s then-president Mario Draghi gave a speech that is now credited with saving the euro. “The ECB is ready to do whatever it takes to preserve the euro, and believe me, it will be enough,” he said at that time.
Greece was in the middle of a debt crisis, and economic instability was spreading to other parts of the eurozone. The ECB, the central bank for the countries that have adopted the euro, had to act.
Ten years later, the euro and the euro zone are still intact. But one of the core issues at the heart of the crisis still remains. In fact, it rears its head every time the region comes under economic pressure.
The crux of the problem in the eurozone is this, according to Angel Ubide from the Peterson Institute for International Economics: “Two identical firms or households have differing financial conditions or funding conditions, just as a result of the country they are located in. So, in that sense, your passport becomes a major determinant of your funding conditions.”
“Of course, there should be differences, but when the differences are very big, and then we can say that monetary policy has been fragmented,” he added.
So, is the eurozone at risk of breaking apart? Watch the video to find out more.
Source: CNBC
