The construction of financial supervision system under Greek debt crisis Essay

IntroductionThe pecuniary crisis and the classical monarch butterfly debt crisis leave accelerated the innovation and construction of EU fiscal supervision system. This report is analyzing the cause of Greek sovereign debt crisis on the basis of the domestic factors, the international factors and EU factors. Moreover, it illustrates the construction of monetary regulatory system of EU based on the level of macro and micro. The macro level has a European systemic lay on the line council the micro level has a secondary European financial regulatory system which is constituted by EU and member states. The EU also has arrest mechanism on the stage, such as, The European financial stabilization mechanism and The European financial stability facility and associated with a series of regulatory measures. The emergency promoter and creative activityal measures launched by The Greek crisis and the European essence have provided experience and lessons for worldwide in response to the global financial crisis around the world.CausesThe Greek thrift was one of the fastest growing in the euro zone during the 2000s. The government of Greece run large deficits due to a strong economy and falling bond paper yield. Debt to GDP has remained above 100% since the introduction of the EURO. The global financial crisis in 2008 makes the Greek economy set up a severe setback and the global financial crisis reveals its wan financial situation from two aspects. First, the economy structure of Greece is relatively single, which means the growth of its economy is inst adapted. Second, the debt investment strategies of National Bank have produces a great burden to the Greek economy. However, the global financial crisis provided pushed the exposing of the financial job of Greece and the country overspent and failed to promise to the European Union the actual size of its ballooning deficit are the primary cause. Furthermore, the European Union also did not review the figures sent in by Athens properly.Long term solutionsThe Greek sovereign debt crisis stimulated the demonstrate of the form of EU financial regulatory system. The explosion of U.S. financial crisis has do Europeans understand that the European financial regulatory did not consist with the market integration process. The leaders of European Union have made evidentiary strategies for ensuring fiscal stability in the long term. Currently, in enjoin to avoid a possible domino effect caused by Greek crisis and to avoid a weak euro, the member state of the European Union, on the one hand, require that the Greece itself must cut spending on a wide range, on the other hand, the member state ask to speed the reform of EU financial market up and strengthen the financial regulatory system on the level of European Union and its members. In order to establish financial regulatory system and its associated measures, there are terce primary aspects to focus on first, the financial regulation of the EU members, strictly control and limit the problem of debt overweight. Second, it is necessary to strengthen financial supervision to keep the speculation by speculators. Third, it is crucial to solve the institutional structure problem of Euro itself. These three must collaborate and communication with each other.Financial regulatory institutionIn order to strengthen European financial regulatory reform, the EU commission proposed to establish European Systemic Risk Council on the macro level and European System of Financial Supervision on the micro level. The main responsibilities are establishing regulatory policy at the macro level and conveying to European regulatory bureau or providing early stage risk warning to compare the observation of the victimisation of macroeconomic and to propose dominant policy in correspond to the change of the supervision. For instance, responsible for collecting analysing financial stability information, publishing risk warning, to take overall regional action when one country has encountered obstacle and hardly deal with it. It aim to solve a major drawback which is exposed by the financial crisis, the financial system is helpless when the systematic risk is complex, associated and between department and cross department.Emergency system in phaseIn order to solve the Greek crisis, the EU and its members use emergencyrelief instrument to manage debt crisis. The main emergency systems in stage are establishing European Financial Stabilisation apparatus and European Financial Stability Facility. Above all, all the instruments and measures are to ensure that the union is able to deal with the debt crisis and also to ensure such crisis will not happen in the future.My commentsI would the like to make a comment on the European problem of the Greek crisis. It seems that the Greek government is uneffective to deal with its budget and is incapable to reduce public spending and increase tax revenues. Since the introduction of the EURO, the financial situation is worsened every year. In my opinion, as Greek crisis has become a European one, i do believe Europe is taking fundamental economic reforms which are necessary to copy with the dissymmetry of the Greek financial crisis.ConclusionAs mentioned above, the Greek crisis and the institutional measures introduced by the EU have provided significant experience for worldwide in dealing with the global financial crisis. First, all crisis has its latency and incentives, it is important to prevent the source in order to prevent the financial crisis and the sovereign debt crisis. Second, the financial crisis and the sovereign debt crisis have brought an opportunity to the reform of the world monetary system and the financial system, it also a challenge for the leading plaza of US dollar. From the development of the European integration process, each crisis has pushed the innovation and improvement of the system of EU in the past and lead to European integrat ion ultimately. The development of the European integration could say that is a process of overcoming the crisis constantly and innovation of system continuously.ReferencesAntonis Antoniadis, 2010. Debt Crisis as a Global Emergency The European Economic typography and Other Greek Fables DellAriccia, Giovanni & Detragiache, Enrica & Rajan, Raghuram, 2008. The real effect of banking crises, Matthew Lynn, 2010. Bust Greece, the Euro and the Sovereign Debt Crisis Martin Feldstein, 2011. Greek default is just a matter of when, notif. In Financial Times. (24.06.11)