European debt crisis

The European sovereign debt crisis is an ongoing financial crisis that made it difficult or impossible for some countries of the Euro area to re-finance their government debts without aid of third parties. From late 2009, fears of sovereign debt crisis developed among investors concerning rising government debt levels around the world together with a wave of downgrading of government debt of some European states. Concerns intensified in early 2010 and thereafter, leading Europe's Finance Ministers on 9 May 2010 to approve a rescue package worth €750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF).In October 2011 eurozone leaders agreed on another package of measures designed to prevent the collapse of member economies. This included an agreement with banks to accept a 50% write-off of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion, and requiring European banks to achieve 9% capitalisation. To restore confidence in Europe, EU leaders also suggested to create a common fiscal union across the eurozone with strict and enforceable rules embedded in the EU treaties.