Categories: EuropeFinance

To Converge or Not To Converge – the Greek Tragedy Continues

Athens, Greece

It seems a long time ago, but when the Euro was introduced, one of the cornerstones for membership and for the long term success of the Euro was convergence of economies within the zone. Convergence does not seem to be on politicians’ lips at the moment but what we are seeing happening across the Eurozone is as much a result of divergent economies as anything else.

Some countries under the cloak of the Euro borrowed way beyond their means, creating a false convergence of kinds in government coffers. The bond markets lent and the countries spent. Now the Eurozone finds itself in a difficult position, devaluation of individual currencies has been replaced by austerity and bailouts at the same time as the cost of the historic borrowing rises, dragging more and more money out of an already stressed economy.

So where does it end? We are in largely uncharted water at the moment – the Greeks have voted for more of the same “medicine” and to try and stay in the Euro. But this is an untested treatment and if one was to use a pharmaceutical analogy there is no certainty the treatment would get past the drug regulators as safe for human trials.

The situation is serious and the infection is spreading, if it was a medical decision to save a life maybe if would be safer to opt for a treatment that had been shown to work. But the Greeks seem to have chosen the new treatment – let’s hope they are right.

CFI

Recent Posts

From Oil Barrels to Algorithms: Why the Gulf’s Digital Future Needs Chief AI Officers

With oil prices projected to plateau or decline in the coming years, Gulf states are…

5 days ago

Corporación Zona Franca Santiago: Forging the Next 50 Years of Sustainable Innovation and Growth

As Corporación Zona Franca Santiago (CZFS) marks its 50th anniversary, the organisation stands at the…

7 days ago

Central Reserve Bank of El Salvador: Driving Innovation and Financial Inclusion for National Development

The Central Reserve Bank of El Salvador (BCR) continues to set the standard for leadership,…

1 week ago

Fortress Europe? Navigating the Perils of a Global Trade War

As global trade tensions escalate, Europe finds itself in a precarious position. Caught between competing…

2 weeks ago

Kathrein Privatbank: Innovating Private Banking with Digitalisation, Sustainable Investing, and Regional Expansion

For over a century, Kathrein Privatbank has remained a benchmark for private banking excellence in…

3 weeks ago

La Trobe Financial: Unpacking the Rise of Private Markets and Private Credit

Private markets—particularly private credit—have experienced a marked surge in investor interest in recent years. Though…

3 weeks ago