The Single European Financial Market: Euro-Zone Debt Crises and Its Regulations
The intent of this work is to present the single European financial market and discuss the pros and cons of its integration in the European Union, the Euro-zone debt crises, its strict regulations (austerities), and its effect on the member-nations’ economies, financial institutions, financial markets, employment, national wealth, and social welfare. An efficient (uncorrupted) financial market might increase return, reduce risk, improve investment, production, and liquidity in the economy, but at the same time, inefficient monetary policies can cause bubbles, unemployment, dependency on foreign capital and multinational firms, and the worst of all the investors lose their wealth and the social welfare is declining. Governments have to increase regulations and improve efficiency of the financial market. Financial markets and institutions (investment banks) have proved recently, with the latest financial (debt) crisis, which has been created by the uncontrolled private institutions that they cannot improve stability and certainty. The financial market is a source of long term capital, but banks can provide similar and less risky services. The European integration with its dubious Maastricht criteria and the common currency, among different nations, have created an enormous social cost to the member-nations and their benefits are too small to cover it; especially, the loss of public policy (fiscal, monetary, and trade), the forced privatizations, the Troika’s austerities for the members and the destruction of the sovereign nations are irreplaceable. The optimal level of integration of the European financial markets and the prevention of its crises are the ones that can maximize the social welfare of the member-nations.
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Ioannis N. Kallianiotis
Department of Economics and Finance, The Arthur J. Kania School of Management, University of Scranton, Scranton, PA 18510-4602, USA.
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