The value of the new euro was based on the average purchasing power throughout the currency zone (Morris 2015). The euro gave Greece the ability to borrow based on a currency overvalued relative to the country’s ability to pay. Most countries base currency on the amount of available backing power in the banks; however, the centralized euro allows the country to spend based on the average eurozone’s backing power. This allows Greece to enjoy a higher purchasing power than it previously was able to provide. “In the years immediately prior to and immediately after Greece’s entry into the Eurozone, nominal and real interest rates came down, sharply contributing to high real growth rates” (Dellas & Tavlas 2013).
Another factor responsible for the spread and severity of Eurozone crisis is the significant amount of sovereign debt owned by the European Banks. So huge was the debt that concerns as regards to the solvency of banking systems, as well as the sovereigns are negatively reinforcing. DeGrauwe (2010) noted that the basic cause of the government debt crisis is mainly the unsustainable accumulation of debt by the private sectors. In other words, the poor performance of the SGP has very little role to play in this
The dollar index, which measures the value of the US dollar against its most significant trading partners, determined that this currency has increased its value in a 15 percent since June last year until January this year. This economic scenario is changing the way of interaction between the most powerful nations and will definitely have an impact in every single company or business around the world due to macroeconomic principles. The main cause of the dollar appreciation is that the United States economy is balanced and better than other developed countries, achieving a Gross Domestic Product Growth of the 5% in the third quarter.
First of all, gold is not a convenient medium of exchange because the gold supply in the world is very limited. Gold is natural resources and cannot be created. Nowadays, there are expanding and increasing volumes of international trade. However, the high volumes of trade cannot be met due to the limited supply of
From2008, currency swap agreements have been used all around the world. Reported by Bloomberg, on October 2013, the Russian and Chinese central banks signed an agreement on yuan-rubles swaps to double trade with its biggest partner. In fact, PBoC has signed the currency swap agreements with 28 countries’ central banks, such as Canada, Korea and Argentina. By doing so, it provides powerful support for the development of overseas RMB market and sets up a yuan-denominated one-to-many trading, financing and clearing system. In the context of globalization, the currency swap agreement has transformed its role as dealing with the crisis to expanding the bilateral trade and investment.
Spain, after the collapse of 2008, saw a rise in the levels of personal debt. Although the public debt stood at 60% of the GDP, the problem was due to foreign exposure of private debt. Spanish banks were relying heavily on whole sale finance from abroad. Portugal had a large current account deficit and external debt which was fuelled by private sector borrowing. Greece, Portugal and Ireland were the worst hit whereas Spain & Italy were considered fiscally vulnerable economies.
Take Spain as an example. Spain is one of European countries suffering from the most serious impact from Financial Tsunami in 2008. In Spain, there is a high unemployment rate now. According to the data from Trading Economics, the unemployment rate in Spain increases from about 10% to nearly 25%. Once the tax is implemented, due to multiple effects from financial market, the unemployment rate would increase continuously.
Usually the finance costs go up with the provision of a longer credit period to the debtors, but it also promotes sales. S.A. Talke’s debtor days are much higher than those of its competitor. This is due to Talke relying on two major customers. These two customers have extended credit terms and represent about half of the accounts receivables at the year end. Payable Days (Payables / COS X 365) S.A. Talke Basem Year 2011 2012 2013 2013 Payable days 141 95 165 58 Payable days helps to evaluate the company’s liquidity.
And find out the deficiencies and solutions based on the economy problems. Key words: Economy, China, Problem, Achievement, Reform Introduction: There is no doubt that China has made the most outstanding achievement in developing countries since 1980s. Even if it does not incorporate Hong Kong, Macao and Taiwan into statistics, China has also become the world 's second economic power, the first manufacturing country and the largest exporter, with the largest foreign exchange reserve in the world and unprecedented in human history.It is widely regarded by the international community as the world biggest winner in economic globalization since 1990s. However, what is the final result of China 's rapid economic development over the past decades? Is there a lot of problems?
They are produced by investment resulting from savings. But our saving ration is very low and not enough for capital formation. Unfavourable economic institutions The functioning of banks, insurance companies and stock exchanges is not up to the mark. They cannot provide money on better interest rates which is necessary for capital formation. Primitive techniques are used in industrial and agricultural small scale production.