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Accountability Representation & control in Euro Crisis

Introduction
Compared with the worldwide financial crisis happened since 2008, the European sovereign debt crisis has been the most serious problem for the ECM. This crisis, also called “the Euro Crisis”, has been regarded as the most serious financial crisis at least since 1930s. This crisis began with the Greek fiscal crisis in the autumn of 2009, and then it evolved into the “PIIGS Crisis”—five main European countries namely Portugal, Italy, Ireland, Greece and Spain were not able to gain enough economic growth in order to pay their debt obligations, and this is why it’s called
And in early years of euro, many scholars, like Uhlig, H. (2002), have foreseen that danger, but apparently these advice don’t raise enough attention. From an ARC view, the euro area is out of condition to be the optimal currency area: although a unified currency could benefit both domestic and foreign trade, the fiscal policies were still controlled by their respective governments. Put it simply, there is only monetary union but no political union.
When American subprime mortgage crisis evolved into a worldwide financial crisis, European countries like Greece had to issue huge bonds to favor their development which is in euro on behalf of the nation. The problem is, their central bank couldn’t issue euro. As a result, the debt scale became out of control and finally, in 2009 these countries (PIIGS) started getting into trouble. Because of slow economic growth and weaker fiscal policies, the tax revenues of these countries decreased leading to high fiscal budget deficits. This resulted in curtailment of budgets by their respective governments to lower the national debt burden. But because of the already accumulated huge debt obligation, there was huge risk involved in investing in Greece sovereign bonds as they might default, therefore nobody would like to buy Greek bonds. Greece’s ten year bonds have been reduced to junk status by Moody’s which downgraded them to C+ rating in late 2009, just