International Finance Essay Example | Topics and Well Written Essays - 500 words

International Finance - Essay Example Also, Germany doesn’t want Europe to unite for a Fiscal Union as it will mean more inflation for the country. These are just some of the factors that are predicting a collapsed European financial system. And then there is Greece. There is an internal war of sorts going on within the country; many want Greece to leave eurozone for good which will be disastrous for the rest of Europe as many other countries will be forced to leave the eurozone as well. (Bremner, 2012) Citigroup, an American banking conglomerate predicts that is a 75% chance that Greece will pull out of Euro within the next year and a half. This will set the standard for other financially despondent eurozone members, like Italy and Spain as they too will have to leave. (Kollewe, 2012) Its exit from eurozone will unravel Greece as well, as the 20% of its GDP will be wiped out, increasing its inflation rates by 40% to 50%. Not to mention. The Greek debt to GDP ratio will swell by 200% as predicted by the analysts at BNP Paribas. (Kollewe, 2012) It seems that only the ECB can decide the fate of this currency. During the end of last year, the European Central Bank loosened some of its bank funds. Right before Christmas, European banks received â‚ ¬489 billion or $620.3 billion. This led to a reduction in Italy’s short term funding. If ECB and Germany can find it in their hearts to work towards more reflationary policies then perhaps the Euro could survive (Bremner 2012). But Euro still has some hope left. Greeks do not like the idea of their desolate future without Euro. Despite all the anticipation, there are few Greeks who want to go back to the Drachma. Indeed, the notion of mass bankruptcies and visions of 50% inflation have won nearly 80% Greeks over. This huge number of people now wants to stay with the currency, says a recent survey. (Bremner, 2012) So it seems that more than the European