Euro Crisis

If you are a regular on our website, you’ve probably read an article we posted few months ago titled “Money by Trust” which gives you a glimpse on the monitory history and explains how all our money today became “fiat currencies” backed up only by virtual value or “your trust in them” instead of tangible Gold or Silver as it originally was

The Euro. Introduced as an accountable currency to the world financial markets in 1999 at a ratio of 1.1743 USD and pushed physically into circulation as coins and banknotes in January 2002 peaking at a ratio of 1.6038 USD in 2008

The Euro was created to be the official currency for the European Union, but was only adopted by 19 out of the 28 countries in the EU: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, and Spain, which are now known as the “Eurozone”

The Eurozone is currently the second largest economy on earth, making the Euro the second most traded currency in the world with over 995 Billion Euros in circulation as of 2014. According to the IMF “International Monitory Fund”, the Euro is also the second largest reserve currency in the world after the U.S Dollar.

The Euro was created to compete with the U.S Dollar and avoid the Eurozone markets from falling in the same traps as the U.S Markets, but European banks were dealing mostly with American banks and competing in the same international markets since they failed to create their own, which led them to fall in the same crisis just a year after the U.S Market did, creating the Euro Crisis today. Since late 2009, the Euro has been immersed in the European financial crisis, which led to the creation of the “European Financial Stability Facility” as well as other reforms aimed at stabilizing the currency. In July 2012, the euro fell below 1.21 USD for the first time in two years, following concerns raised over Greek debt and Spain’s troubled banking sector. As of February 2015, the Euro–Dollar exchange rate stands at 1.14 USD, turning the Euro into an unstable currency, bankrupting many large European corporations and driving the Eurozone economy down. Currently Greece is threatening to drop the Euro in favor of going back to their local currency, which would cause the Euro to drop even steeper causing the entire Eurozone economy to crash regardless of the individuality of each country’s market state, leading to the same domino effect witnessed during the 2008 American financial crisis

Knowing all this, if you’re a businessman investing in Euro, would you sell and cut your losses, or hold on and hope for a solution to reform the situation?

Marwan Rashid
LFBC Correspondant