Economic issue - Assignment Example

Economic issue Global recession. It impacts strongly the international banking credibility this is because the currency weakens and as a result the whole economy gets damaged and the bank records a loss. It causes Financial volatility. It affects banks lending spirit and willingness to invest in bank by investors.2. IMF has significant influence in the developing economies where it assists in development agenda. However, it is important to note that it has always come up with some economic restructuring policy that affects the citizens.

IMF have in some instances proposed freeze in employment in critical sectors of the economy like in education and healthcare. This is counterproductive to the developing nations whicgh are increasingly implementing free and voluntary education and healthcare provision. This has led to civil unrest due to increasing unemployment and pay cut in an effort to restore IMF’s proposed economic targets. The interest paid back by the borrowers to IMF translates to increased taxation against constant wage rate leading to higher and unaffordable living standard.

This forces the citizens to go on strike for increades wages and lower commodity prices.3. a) There is no European Monetary Union without fiscal union. The micro-economic imbalance in Euro cannot be managed without fiscal union. It is efficiency.it will make the union stable satisfactory finances. The European Monetary Union makes the union greater. Fiscal union is a major move to create great political union. The federal bodies will be administered and a central tax would become a great idea in Europe.

With fiscal union the European union will have a united stand, to stop Europe’s decline in global market, an economic union must be formed. This will result to fiscal union that will otherwise raise the Europe market.b) I disagree because local solution is suited for a local problem. Government needs to come up with local solution for local problems. It leads to democratic deficiency. Fiscal union is a thorn in the flesh for countries independence.Lead to more taxation. Fiscal union will lead to tax harmonization that is always on the increase and nation will pay more.

It will create a freeloaders’ charter. The fiscal union will punish budgetary allocation.Work citedBrux, Jacqueline M. Economic Issues and Policy. Mason, OH: South-Western Cengage Learning, 2011. Print