Transcript European sovereign

European sovereign debt crisis.
Crisis in Spain.
The presentation was performed
By the pupils of 11”C” form
Khanyan Artiom
Lefterov Savva,
Teacher of Economics
Rafalskaya Irina
European sovereign-debt crisis
• The European sovereign
debt crisis (often referred to
as the Eurozone crisis) is an
ongoing financial crisis that
has made it difficult or
impossible for some
countries of euro zone to
repay or refinance their government
debt without the assistance
of third parties
European sovereign debt crisis
• Causes of the crisis
varied by country.
European Sovereign debt crisis
• Concerns intensified in early 2010
and thereafter, leading European
nations to implement a series of
financial support measures such as
the European Financial Stability
Facility (EFSF) and European
Stability Mechanism.
European Central Bank
• European Central Bank
(ECB) has also took part
by lowering interest
rates and providing
cheap loans of more
than one trillion Euros
to maintain money
flows between
European banks.
Crisis in Spain
• Spain had a
comparatively low
debt level among
advanced
economies prior to
the crisis.
Crisis in Spain
• The bank bailouts and the economic
downturn increased the country's deficit
and debt levels and led to a substantial
downgrading of its credit rating.
Crisis in Spain
• Nevertheless, in June 2012, Spain became a prime
concern for the Euro zone when interest on
Spanish 10-year bonds reached the 7% level and
it faced difficulty in accessing bond markets.
Crisis in Spain
• As on October 2012, the Troika
(EC, ECB and IMF) is indeed in
negotiations with Spain to establish an
economic recovery program, which is
required if the a bailout package for the
sovereign state from ESM. Reportedly
Spain, in addition to the €100bn "bank
recapitalization" package arranged for in
June 2012, now also seeks sovereign
financial support from a "Precautionary
Conditioned Credit Line" (PCCL) package.
Crisis in Spain
According to the latest
debt sustainability analysis
published by the European
Commission in October
2012 nation debt rate
amounted to 85,3% GDP.