The European debt crisis of 2009 Essay Example | Topics and Well Written Essays - 500 words

The European debt crisis of 2009 - Essay Example Ireland was another major economy which was hit hard by the sovereign debt crisis due to the fact that Irish government actually guaranteed the loans of six large banks having portfolios in the property sector. Due to the heavy losses suffered by these banks, Irish government faced the task of honoring its guarantees and hence crisis started to emerge regarding the possible default by the Irish government. Portugal, Spain, Italy were three other major economies which faced the similar debt crisis due to high government debt and the looming default possibilities.In order to deal with the debt crisis, EU offered bailout packages to the different economies facing such crisis. The overall bailout packages offered to these countries, however, were a combination of the support offered by World Bank, IMF, EU Central Bank and other bilateral and individual arrangements. Overall, more than 480 billion euros were offered to 9 countries of the region to avert any possible sovereign debt default s due to the crisis.Apart from giving the emergency support, other measures were also taken including the creation of the European Financial Stability Facility, European financial stability mechanism, and other measures were put in place. One of the key criticisms of the overall governance structure at EU wide level which resulted in this crisis was based upon the argument that at EU wide level, countries are allowed to pursue their independent fiscal policies, however; monetary policy was being directed through European central bank.