Three years lending € 80 billion euro EU out of hand to rescue Greece

Wen/yang (ph. D., Department of Finance and Accounting, British Imperial University, UK) April 27--International standards and Poole downgraded Greek sovereign debt to junk, and stock markets around the world were hit and lower.　　Then standard Poole downgraded Portugal and Spain, fearing that the Greek financial crisis could spread across Europe and that the euro fell against the dollar. With interest rates on Greek government bonds soaring and 2-year bonds at 20% per cent, the Greek government is unlikely to raise money from financial markets. Fearing a Greek bankruptcy and triggering the euro crisis, the European Union and the International Monetary Fund have drawn up plans to jointly fund the Greek bailout. In the next three years, the European Union and the International Monetary Fund will lend Greece 80 billion and 30 billion euros respectively, with the European Union's largest economy, Germany, contributing 22.4 billion euros. But the package includes harsh conditions, and Greece must provide an effective plan to cut the deficit, and Greece is expected to make big tax increases and cut public spending.　　But Greek union groups are ungrateful, and government spending cuts mean fewer jobs, and there have been a number of demonstrations in Greece before the financial aid package was released. The Greek rescue package shows the close ties between the eurozone countries. The financial situation of a Member State would also be affected by other Member States. Germany is the largest contributor to the bailout. Germany's domestic opposition has been strong, but the German cabinet has passed a rescue plan for Greece. As Greece collapses, the euro is bound to plunge and the economies of the eurozone members will be hit hard.　　And Europe has been moving towards integration, if the EU does not rescue, although it is hard to say will affect the confidence of Member States to stay in the EU, but will affect the integration process. The conditions for EU membership to join the eurozone are harsh, with the fiscal deficit capped at 3% of GDP, the second being that national debt should remain below 60% per cent of GDP, and the third is that inflation cannot exceed 1.5% of the three best member countries ' previous year's inflation rate. Even so, the majority of EU Member States want to join the eurozone, it is conceivable that after joining a huge profit. The most direct benefit is to simplify the transaction procedures, reduce the cost of settlement, so that each Member State enterprises to reduce costs, enhance competitiveness. After the implementation of the unified currency, the European Central Bank will formulate and implement a unified monetary policy, the price and interest rates will gradually converge, so as to balance the industrial structure and investment structure of member countries, conducive to the rational development of the market. In addition, eurozone member states can reduce exchange rate risk and financing costs.