Economic Situation in Europe

0
400

Reports from Brussels confirm that the European Central Bank appears ready to do away with emergency measures that were implemented 10 years ago in an effort to prevent the Eurozone from breaking during the needy time of a financial crisis. However, the decision has not been reached, but people close to the council expect a confirmation following a meeting with the Governing Council of the bank. This is a move that will help send a message of the astonishing renaissance of the Eurozone economy. At the same time, some experts fear that the disintegration is likely to expose some weaknesses within the region. Should this happen, there are fears that new economic measures would be implemented. The process is referred to using the term tapering, and no one is sure of the unpleasant surprises that may arise. This will mean that the central bank will take away the money that it gave to banks. This is the same money that made lending easy. At the same time, it made it easy for governments to borrow the same money. However, the money has remained in place despite things turning to normal. Also, investors and governments were not borrowing the money like they did 10 years ago.

According to a statement that was issued by the Governing Council, it plans on issuing a timeline that would be followed in the purchase of corporate debt as well as government debt. This will be possible through a process known as quantitative easing. For instance, the bank revealed that it was using newly created money to ensure that assets and bonds worth over $.2.35 trillion are purchased. For starters, this amount is equivalent to the annual economic output of India. To understand the economic situation in Europe, experts said that most of Italian banks still struggle with bad loans. At the same time, Italy has a huge public debt such that it’s forced to pay interests using approximately four percent of its gross domestic product. Also, there are fears elsewhere in places like Frankfurt where real estate prices have skyrocketed to the extent that officials are preparing for a bubble. The economic order will strain further when the United Kingdom completes the Brexit process. In the region, everyone including politicians, businesses, and consumers have gotten used to low-interest rates and taking this away is likely to cause an uproar. In fact, the central bank of Europe offers loans at below one percent interest rates.

LEAVE A REPLY

Please enter your comment!
Please enter your name here