News / Economy

Eurozone Faces Contentious Choices to Save Currency

Europeon Debt to GDP Ratio

As European leaders attempt to defuse the continent's debt crisis, they are confronting contentious issues over national identity, vastly different economies and how much power should be centralized to control the spending of individual nations.

The fate of the eurozone - the 17-nation bloc that uses the euro - hangs in the balance, as well as the threat of a worldwide recession if the crisis is not resolved quickly.The European debt crisis has now extended for two years. The continent's leaders are under increasing pressure to take decisive action to assure international financial markets and keep the debt contagion from spreading. The key current fear is that Italy, with $2.6 trillion in debt, may need a bailout, and that Europe would be unable to cope with such a large potential default.  

Brussels meeting

The eurozone finance ministers meeting in Brussels Tuesday were faced with meshing the political and financial interests of diverse countries -- from economic powerhouse Germany, with a $3 trillion national economy, to the tiny island nation of Malta, with a $10 billion annual economy. Then, early next month, European leaders are holding a summit to discuss their options.

The key idea under consideration would force the 17 nations to cede sovereign budget control to a new central authority, likely in Brussels, that could force new austerity measures on such debt-ridden countries as Greece, Portugal, Ireland, Italy and Spain. The idea is to force the eurozone's weaker governments to adhere to strict spending standards to prevent the need for more international bailouts.

But such central control has long been anathema to European governments and was until now unthinkable in the eurozone. Numerous governments fear the loss of their national identity and control over their destiny.

Debt sales

Various new types of debt sales have been proposed as well, such as the creation of euro bonds, encompassing the debt of the 17 nations, not just that of individual countries. But Germany, and other strong economies in northern Europe, have so far resisted that concept for fear that their top credit ratings would be sharply diminished and their borrowing costs increased if they had to help pay for the debts of weaker governments on the eurozone's geographic periphery.

Under another variation, only countries with the top credit ratings could band together to sell their debt.

Some analysts have suggested that the European Central Bank needs to increase its funding for individual nations, another idea Germany has so far opposed, again fearful that its AAA credit standing would be diminished.

Some information for this report was provided by Reuters.

You May Like

At International AIDS Conference One Goal, Many Paths

The 12,000 delegates attending 20th International AIDS Conference in Melbourne have vastly different visions about how to eradicate disease More

Disasters May Doom Malaysia’s Flag Carrier

Even before loss of two jets loaded with passengers on international flights, company had been operating in red for three years, accumulating deficit of $1.3 billion More

Afghan Presidential Vote Audit Continues Despite Glitches

Process has been marred by walkouts by representatives of two competing candidates, Abdullah Abdullah and Ashraf Ghani More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nature of Space Exploration Enters New Agei
X
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.
Video

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.
Video

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.
Video

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.
Video

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.