Euro Zone Crisis: A Comprehensive Analysis With Special Emphasis On Portugal

Eurozone Crisis: A Comprehensive Analysis with Special Emphasis on PortugalIn 1992, the Maastricht Treaty formally created the European Union as the move towards a common market soon revealed a need for monetary coordination, and this eventually led to the circulation of the euro currency in January 2002. Nineteen of the twenty-eight EU member states are part of the EuroZone, while other EU states, including Bulgaria, the Czech Republic, Hungary, Poland, and Romania, are required by treaty to eventually join. Even if the euro is destined to replace the dollar, it will happen slowly, and not cause a dollar collapse. Another reason why the shift to the euro, if it occurs, would happen slowly is because of the eurozone crisis. The European debt crisis is a multi-year debt crisis that has been taking place in several eurozone member states since the end of 2009. These states (Greece, Portugal, Ireland, Spain,Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like the EFSF, the ECB, or the IMF.Portugal?s foreign debt-financed deficit?over 10 percent of GDP in 2009?meant that when investors withdrew, the country could no longer finance itself. This paper aims to draw a parallel between the Portuguese crisis and other European countries in similar situations with an in-depth analysis of the foreign exchange structure prevalent in the Eurozone. It will also infer common points surrounding these crises and examine possible solutions and safeguards for the future.