Analysis of the Euro and the European Monetary System and Its Effect on Greece in the Light of the European Financial Crisis

The ability to issue money used for transactions is a power usually reserved by a country’s central government, and it is often seen as a part of a nation’s sovereignty. A monetary union entails multiple countries ceding control over the supply of money to a common authority. The euro was introduced sixteen years ago and has since functioned well, with the European Central Bank keeping inflation low. However, the current Eurozone crisis provides a severe test of the euro’s ability to survive. The Eurozone crisis is plagued by fiscal crises, which have taken their biggest toll on Greece. A competitiveness crises, which is evident in the large current account deficits along the Eurozone’s periphery, and the even larger current account imbalances between Eurozone countries, and a banking crisis, which first unfolded in Ireland, has now spread in the euro area. This thesis asks one main question: will the euro survive the Eurozone crisis