After much discussion amongst the leaders of Greece and the Eurozone finance ministers, the Eurozone ministers have agreed to loan money to Greece for another four months. In return, the leaders of Greece have provided a list of things that will be implemented within the country, such as following up on folks not paying taxes and spending the money in a controlled manner.
In 2010, Greece’s debt had become a serious issue. The country had a huge loan and did not have money to pay back the portion that was due. When a country is unable to pay back its loan, it gets harder for the country to get more loans. It can also reduce the value of its currency. Greece’s debt was also a concern for some other European nations because they use the same currency called “euro”. If the euro’s value goes down, it financially hurts these other countries as well.
The currency of a country is what people use to buy and sell things in that particular country. For example, the currency of the United States is the U.S. dollar. The euro (sign: €) is a relatively new currency. It was introduced in 2002. Since then, the euro has been adopted by 19 European Union countries and a few other countries as their currency.
Greece gave up its drachma to adopt the euro in 2002. Once Greece adopted the euro, it became easier for it to borrow money. The government spent much more than it could afford, and kept borrowing to make up the gap. As a result, the country accumulated a big debt. In 2010, the Eurozone along with some other institutions agreed to loan Greece money, as long as Greece reduced its spending. To save money, the government raised taxes, cut jobs, and reduced salaries. Greece has gotten further loans, and still requires more money.
The most recent nation to adopt the euro as its currency was Lithuania on January 1 this year. For a country to use the euro as its currency, it must meet certain requirements on things such as the money it owes and the interest rates it offers.
Image Credits: https://www.ecb.europa.eu/euro for euro symbol and euro using countries map image
Sources: http://europa.eu/, http://www.euronews.com/, http://www.nytimes.com/, https://www.ecb.europa.eu/euro