Financial Crisis in Greece - Admission/Application Essay Example

Effects of Financial Crisis Introduction Financial crisis is a term for use where several monetary assets rapidly lose a great part of their nominal worth. This occurs due to poor monitoring of currency. Mismanagement of the executive financial institutions is also a grand contributor of financial crises. The essay is about the problem in Greece and its origin, and the benefits Greece derives from being part of euro zone. In addition, are effects of exiting the eurozone on both monetary policy and fiscal policy.

Finally is how this exit would affect options for financing debt.Nature and origin of the problem in GreeceThe problem in Greece is unsustainable budget deficits and a recession. This is due to pervasive economic reforms in Greece that necessitates it to join the European single currency, the euro. Through the link, Greece was able to absent itself from the use of drachma currency into the use of eurozone. This was of significance in that Greece would have access to loans from other European counties.

Mottl (48) states, “one must be bound to the policy” so when making decisions, consider the consequences.Benefits that Greece derives from being part of the euro zoneSeveral advantages came as a result of Greece becoming part of the euro zone. For instance, the Greece government would scrounge on the International capital market at favorable interest charges. The government would borrow at rates slightly above those that German, the strongest European Union economy was paying. This enlightens business persons to consider the advantages of partnerships.

Secondly, it would easily access Greek’s goods and services to the other euro member markets. This led to a rise in Greece’ Gross Domestic Product at remarkable rates until the strike of the monetary crisis.Effects of exiting the eurozone on the monetary and fiscal policiesThe departure of Greek from eurozone will subject Europe to an unfamiliar state. For one, Greece will fail to pay its debts, a way of evading the capital of European Central Bank. In addition, the cost of other euro zone members would effectively increase as it would have to prevent a complete crumple of Greece.

On the side of fiscal policy, there will be a negative impact in that it takes more time to restructure the financial statements. This calls for a restraint on how to compensate the members.Effect on options for financing debtQuitting of Greece from euro zone will hinder it from funding debts. It has little potential to pay the debtors. This is because it initially had to join eurozone to be able to pay its debtors. Similarly, the financial institutions in today’s world face the same problems.

Their rush to merge with other institutions in order to accumulate more capital turns out to be a setback if the other institution withdraws.ConclusionThe exit of Greece is an immense loses to the other members of euro zone (Lorca-Susino 18). This makes euro zone state search for an initiative to maintain the membership of Greece. From this, people should learn that it is important to scrutinize the financial state before joining other institutions. However, Wood & Carmine (261) states that, “part the vanquishing your enemies and securing your country’s hegemony for a generation”.

Hence one should shun loss making operations. Work citedLorca-Susino, María. The Euro in the 21st Century: Economic Crisis and Financial Uproar. Farnham, England: Ashgate Pub, 2011. Internet resource.Mottl J. Tightening Bettway Distribution: LexisNevis.com 2002.Wood, Randy, and Carmine DeLuca. The Dictators Handbook: A Practical Manual for the Aspiring Tyrant. s.l: Gull Pond Books, 2012. Print.