Problems of Creation EU Essay Example | Topics and Well Written Essays - 500 words

Problems of Creation EU - Essay Example One can compare this problem with the case study of American. The USA is probably the country with highest levels of debts. However, it can never default on its sovereign debt obligations because it can print its own money to settle all the outstanding debts. However, Greece does not have this luxury. This has created a problem not just for Greece but also its creditors. Whenever there is a credit meltdown or a debtor defaults on his obligations, it starts a domino effect. It results in the collapse of the entire system or good part of it. This is what is happening to Euro. Since Greece has defaulted, there are chances that many other countries are going to collapse or fall down. Â  Many people say that Euro is built to the last. It can still exist despite the Greece example. This can be partly true. Although it looks difficult the probability of Euro recovering is not zero. Still, we can believe that the system might be able to sustain itself. The only way that Euro can sustain itself is that it starts focusing more on inter-lending and if it develops a system that focuses on a circular debt between the countries using the Euro. Since Euro is limited in supply, and no one country can print Euro, therefore in case credit event occurs in Euro-based lending, the ECB might be able to recover that or write off that loan in order to protect the system, or with the consensus of all EU countries, the amount of loan defaulted can be pumped into the country which has suffered a credit event. This would make sure that the EU crisis would not start a domino effect in the global financial markets and would not pose any global threat to the system. Â   Â