TheEuropean Economic Uncertainty
TheEuropean economic uncertainty
TheEuropean money is one of the popular currencies in the world that theindividuals, corporations, and nations use to sell and buy goods andservices (Bachmann,Elstner & Sims, 2013).The euro is a favorite savings medium for many individuals due to itsrelative stability than many other world currencies. The vitality,balance, and volume of the European economy increase the value of themoney (Colombo,2013).The European economy is the world’s strongest after the UnitedStates which enhances the demand for the euro in the internationaltrade. Many third-world nations’ individual and public sectors usethe euro as the currency reserve in trade (Hofmann& Hohmeyer, 2013).The widespread use of this money represents how important theEuropean economy is to the global economic market.
Accordingto Berger& Uddin (2016), inthe year 2015, more than a fifth of the global foreign trade reserveswere in the form of Euros. This currency is also widely used whengiving government loans and when repaying them. In 2015, the eurodominated the global debt market with an extensive usage of 40%. Morethan half of the European imports are traded via the Euro while morethan 65% of exports from the same region use the Euro. The morewidely a currency is used in the global business, the greater theeconomic importance of the nation (Hofmann& Hohmeyer, 2013).The Euro is increasing becoming a preferred currency for mosttransactions all over the world. Several countries peg their currencyto the euro as an anchor currency (Bachmann,Elstner & Sims, 2013).
Europeis a leading global economy that is part of the G7 and the IMF whichamplifies the voice of the European economy in the global scales(Colombo,2013).The European Union is comprised of several nations that have combinedto form an economic block which airs their concerns as one entity.The union’s activities are coordinated by the European Commissionand the Central Bank in the global financial meetings (Kreyenfeld,Andersson & Pailhé, 2012).
Inthe year 2015, the European economy faced a lot of financialdifficulties with this situation proceeding up to the next year(Berger& Uddin, 2016).Greece experienced debt crisis since the year 2009 which negativelyaffected its progress. This challenge peaked in the year 2015 whenGreece was almost bankrupt, and it seemed like Greece was about toexit the European Union (Hofmann& Hohmeyer, 2013).A bailout from the European Central Bank saved the country from itscrisis (Berger& Uddin, 2016).The issues that occur in the European Union remain a global concerndue to the nations’ economic position in the globe (Kreyenfeld,Andersson & Pailhé, 2012).It implies that the performance of the union would determine theglobal welfare.
Withcurrent trends such as the financial crisis faced by some of themember nations and the withdrawal of some of the notable signatoriesof the union such as Britain, the union as well as its currency isbecoming unstable (Berger& Uddin, 2016).The balance of the Euro is a global concern for sustained economicgrowth to be realized. The European economy is slowing down in growthwhich prompted the European central bank to initiate a quantitativeeasing program which concerned the massive purchase of bonds to aidthe economy (Berger& Uddin, 2016).The bank also reduced the deposit rate of the European Union to-0.03% resulting in huge variations between the Euro and the dollar.Many developing countries that had pegged their currencies to theeuro are now experiencing a lot of financial difficulties just likethe European Union as their currencies follow a similar trend to thatof the Euro (Berger& Uddin, 2016).
Bachmann,R., Elstner, S., & Sims, E. R. (2013). Uncertainty and economicactivity: Evidence from business survey data. AmericanEconomic Journal: Macroeconomics, 5(2),217- 249.
Berger,T., & Uddin, G. S. (2016). On the dynamic dependence betweenequity markets, commodity futures and economic uncertaintyindexes.EnergyEconomics, 56,374-383.
Colombo,V. (2013). Economic policy uncertainty in the US: Does it matter forthe Euro area?. EconomicsLetters, 121(1),39-42.
Hofmann,B., & Hohmeyer, K. (2013). Perceived economic uncertainty andfertility: Evidence from a labor market reform. Journalof Marriage and Family, 75(2),503-521.
Kreyenfeld,M., Andersson, G., & Pailhé, A. (2012). Economic uncertainty andfamily dynamics in Europe: Introduction. DemographicResearch, 27,835-852.