Group-1 Priti Kumari Divija- Ajit Harsha - Sarasij Sarkar

The eurozone officially called the euro area, is an economic and monetary union (EMU) of 17 European Union (EU) member states that have adopted the euro () as their common currency and sole legal tender.

The eurozone currently consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain

Monetary policy of the zone is the responsibility of the European Central Bank (ECB) which is governed by a president and a board of the heads of national central banks.

From late 2009, fears of a sovereign debt crisis

developed rising government debt levels across the globe downgrading of government debt of certain European states. Concerns intensified early 2010 and thereafter making it difficult or impossible for Greece, Ireland and Portugal to re-finance their debts.

Globalization of finance Easy credit conditions during the 20022008 period that

encouraged high-risk lending and borrowing practices

International trade imbalances Real-estate bubbles

Slow growth economic conditions 2008 and after

Government revenues and expenses Bailout Packages

Rising government debt levels

In 1992 members of the European Union signed the Maastricht Treaty. However, a number of EU member states, including Greece and Italy,

were able to circumvent these rules and mask their deficit and debt
levels through the use of complex currency and credit derivatives structures

The structures were designed by prominent U.S. investment banks,

who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties.

Trade imbalances

Monetary policy inflexibility Loss of confidence

In the early-mid 2000s, Greece's economy was strong and the government took
advantage by running a large deficit

On 23 April 2010, the Greek government requested that the EU/IMF bailout package

The initial size of the loan package was 45 billion ($61 billion) and its first instalment covered 8.5 billion of Greek bonds that became due for repayment.

On 27 April 2010, Standard & Poor's slashed Greece's sovereign debt rating to BB+ or "junk

On 1 May 2010, a series of austerity measures was proposed On 2 May 2010, the eurozone countries and the International Monetary Fund

agreed to a 110 billion loan for Greece, conditional on the implementation of

harsh austerity measures.

May 2011 Public protested and reject the austerity measures

On 13 June 2011, Standard and Poor's downgraded Greece's

sovereign debt rating to CCC, the lowest in the world

At an extraordinary summit on 21 July 2011 the euro area leaders

agreed to lower the interest rates of EU loans to Greece to 3.5%.

In the early hours of 27 October 2011, eurozone leaders and the IMF came to an agreement with banks to accept a 50% write-off of

Greek debt, the equivalent of 100 billion. The aim of the haircut is
to reduce Greece's debt to 120% of GDP by 2020.

Financing of Property Bubble On 29 September 2008 the Finance Minister Brian Lenihan, Jnr issued a one-year guarantee to the banks' depositors and bond-holders.

He renewed it for another year in September 2009 Irish banks had lost an estimated 100 billion euros Unemployment rose from 4% in 2006 to 14% by 2010, while the federal budget went from a surplus in 2007 to a deficit of 32% GDP in 2010

The December 2008 hidden loans controversy within Anglo Irish Bank By September 2010 the banks could not raise finance and the bank guarantee was renewed for a third year.

Government encouraged over expenditure and investment bubbles through unclear public-private partnerships and funding of numerous ineffective and unnecessary external consultancy and advisory of committees and firms.

Portugal fell victim to successive waves of speculation by

pressure from bond traders, rating agencies and speculators.

On 16 May 2011 the eurozone leaders officially approved

a 78 billion bailout package