Over the past few years, we have seen the Greek economy struggle and things are about to get even harder for Greece. This is because the European Central Bank has decided to restrict any sort of financing to the country's banks; this action sent Greek shares in a downward spiral. The European Central Bank will not be accepting anymore Greek government bonds as a form of collateral which makes it even more expensive for Greek banks to access cash. This announcement sent the Greek stock market down 6% and Greek bank stocks declined even more at 16%. The whole financial crisis in Greece does not seem to be getting better anytime soon. Greece will have to look to international lenders for money because the ECB is not willing to provide the funds necessary to help Greece. It will be interesting to see how this action affects the Greek economy and the Eurozone as well.
article link: http://www.bbc.com/news/business-31142437
2 comments:
It's hard to think that the Greece economy could become any worse. I think the best thing for Greece would be to drop the Euro. A return to the drachma would put the tools of monetary policy back in Greek hands.
I'm not a return to the drachma would do much good: right now, the main benefit of the Euro for Greece is that it provides monetary stability for the Greek currency, which will be critical in helping the Greeks reinvigorate their economy in the long term by providing the stability needed for credit and investment. A return to a drachma with no backing and the financial trouble in which the Greeks find themselves would close off avenues for fiscal reform and monetary security and may well tip the Greek government into a general default, as well as cause a crisis of confidence in the Euro for its other member states. Though the Euro may be a reduction in national sovereignty for the Greeks through its control mechanisms, for the time being, I'd contend that this is more good for the Greek economy than harm at the moment.
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