Question 1 Essay

642 words - 3 pages

I believe in over all political conditions in Europe, complexity and less transparent of the Maastricht Treaty convergence criteria and the Growth and Stability Pac, poor enforcement, poor surveillance and lack of commitment to fiscal discipline on the part of the Member States of the European Union are some of the reasons that applications of these limits has been failed and somehow couldn’t prevent the Eurozone crisis.
According to the “Can the Eurozone Survive?” case study: The Maastricht Treaty forming the European Union (EU) and laying the road to monetary union in 1992 and adopting the euro as single currency, on January 1, 1999. There some issues with the common currency such as individual countries would lose competitive devaluations and expansionary monetary policies the tools that use more frequently when facing a recession. To adopt the euro, the Maastricht treaty required countries to adopt stringent monetary and fiscal policies. By July 1, 1998, eleven states were deemed to have met the “convergence” criteria for adopting the euro. The maintaining fiscal deficits under 3% of GDP and limiting government debt to 60% of GDP were required. It seemed like political conditions overcame when a weighted majority vote of member governments had the actual power to decide which nations adopted the euro. Additionally, Stability and Growth Pact (SGP) requiring members that violated debt and deficit limits to be monitored under an “excessive deficit procedure” that actually was often ignored. For example, when Germany and France exceeded the deficit limits, the European Commission, the EU’s administrative body, called for an excessive deficit procedure, but the heads of state meeting in the Council of Ministers, where Germany and France held heavily weighted votes, brushed the commission aside and either other finance ministers concluded they would not have to pay much attention to the SGP In addition. Exhibit 1a shows since 2009 most...

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