The Financial and sovereign debt crisis In Europe Essay

The Financial and sovereign debt crisis In Europe - Essay Example However, the sovereign debt crisis particularly worsened in 2010 raising many concerns over the effectiveness of the fiscal policy adopted by the European Monetary Union, which appeared to have failed totally in abating the crisis. Greece and Ireland were among the worst hit countries while Spain and Portugal experienced its impact to a lesser extent. Nevertheless, other European countries have raised concerns that the crisis needs to be controlled amicably lest it spreads to other European countries a scenario, which may become difficult to solve. As a result, the European Union has proposed a raft of measures, which it aims to use in solving such crises in Europe. This paper will analyze some of the new policy initiatives that the European member states has proposed for tackling the financial and sovereign-debt crisis in the region. ... This is in spite of the fact that the policy has put a lot of emphasis on keeping the debts of the public sectors low, as well as strengthening a forward-looking budgetary planning. Furthermore, even after the occurrence of the crisis of 2010 that resulted in the agitation of the financial markets, it became apparent that the EMU did not have what it takes to manage and solve the crisis as noted by Cottarelli et al. (Par.4). Such a failure has prompted the European Union to respond to the crisis in more appropriate manner that will prevent any financial and foreign debt crisis in the future. The first proposed policy for solving Europe’s financial and sovereign-debt crisis in the region was the stabilization of Greece followed by the establishment of the European Financial Stability Facility (EFSF) that has proved effective in stabilizing markets (Honohan par.2). Nevertheless, Swartz reveals that these crisis responses were established in an ad-hoc manner and on a provisional basis and fails to provide an adequate basis for dealing with any probable future debts and financial crisis (6). There are also several other policies which have been proposed as a means of tackling the financial and sovereign debt crisis in the Euro zone. The paper will examine the new policies that have been proposed to solve the financial and sovereign debt crisis in Europe. Becker argues that Europe is one of the regions that suffered most from the effects of financial and sovereign debt crisis that affected several countries in this region following the debt and financial crisis of the 2010 spring (Par.1). This crisis is said to have affected many financial markets in the region including banking institutions, which suffered