Sovereign Debt Crisis in the Eurozone– Towards an Inevitable Reforming of the Euro Institutions

The Eurozone is facing the deepest crisis since its foundations. The subprime crisis that surged in the United States spread into a banking, then economic crisis. Markets were won by panic and overreacted to risk, generating the European sovereign debt crisis. The article is structured as follows. In the first section, I revisit the main causes and factors that made the sovereign debt crisis possible. In the second section, I study the challenges the Eurozone is facing in the process of restabilising market confidence and putting European peripheral economies on a sustainable path. Third section assesses the main proposals, such as the introduction of the European Monetary Fund and the creation of a Eurobond market and considers the advantages and the drawbacks of these solutions. Finally, the last section concludes and makes an assessment on possible outcomes for the Eurozone. Reforming its institutions appears compulsory for its future survival should a further crisis emerge.