European Business Environment Essay Example | Topics and Well Written Essays - 750 words - 1

European Business Environment - Essay ExampleThe Euro is the starting line currency that was introduced without the backing of any single inelegant, and rather had a large number of stakeholders with no ace really ready to take full responsibility. The single currency posed many challenges to some of the nations whose policies were not flexible enough and those with regulated markets. From the very first day, economists feared that any external adjustment to the Eurozone would transfer pecuniary cut backs to the inflexible markets through the currency and exchange crops. Any shock would result in changes to the exchange rate which will create problems for nation who had inflexible markets such as a labor market. Another issue is the lack of supervision that was assigned to the slangs of the nations in the Eurozone. The Irish bank, for example, gained its finances from the German and French banks but in that location no check on the limit of the borrowing from the Irish bank. Soon after the Irish bank found itself into trouble, it also affected the European Central Bank. The situation was sort of similar to the U.S. Federal coldness where it serves as the exchange bank of several states. In this case, the European Central Bank served as the central bank of several nations and it had to keep the borrowing of its member nations into check at all points of time. However, there was no such policy present to keep this check and the banks were given permission to borrow, which eventually resulted in over-borrowing of notes of banks from external sources and thus the Eurozone economies faced such financial shocks. The European Central Bank is actually a very weak institution by design since its inception. It has a very limited authority to lure the financial position of the countries under Eurozone. Let alone the powers to enamor, the ECB also as a limited locate of supervisory roles that any of the central bank would give birth. The ECB does not have th e authority to buy any of the Eurozone country debt which limits its power as a central bank and its role to correct the errors made by single(a) nations. Not just this, unlike the other central banks of nations throughout the world, the sole mandate of the ECB is inflation. By law, the European Central Bank had no authority to interfere to correct the unemployment issues and could only take measures that corrected the issues associate to inflation. (Skaperdas, n.d.) Another issue is that the European Central Bank only has the power of implementing the monetary policies and it could not influence the fiscal policies, which were controlled by the individual nations. In the modern world, most of the financial issues are addressed though fiscal policies which trigger or control the economic growth and inflation levels. Therefore, the different fiscal policies enforced by the numerous member nations resulted in different impacts of the financial crisis in 2008. In order to outgo the differing monetary and fiscal policies in the region, the member nation signed the Stability and Growth Pact to have a fiscal discipline and keep the debt levels and budget deficits within acceptable limits. However, the pact failed primarily collect to a lack of commitment on part of the member nations and they continued to violate the condition toughened under the pact. The commission in charge under the pact proposed a one-size-fits-all policy which was inappropriate and less-traveled because the member