What’s the latest?
After several contentious months of negotiations between the country and its creditors, Greece received its third bailout in five years. Terms of the bailout including commitments by the country to implement austerity measures and economic reforms, which Greek lawmakers recently approved.
The legislation covered some of the economic changes sought by the country’s international creditors, which include raising the retirement age, cutting pensions, liberalizing the energy market, opening up cosseted professions, expanding a property tax that Greeks already revile and pushing forward a stalled program to privatize state assets.
Passing that package paved the way for Greece to receive the first 2 billion euros, or about $2.3 billion, from the bailout program. But Greece’s international bailout program has hit snags, even before the first euro of loan payouts has been dispensed.
How does the crisis affect the global financial system?
In the European Union, most real decision-making power, particularly on matters involving politically delicate things like money and migrants, rests with 28 national governments, each one beholden to its voters and taxpayers. This tension has grown only more acute since the January 1999 introduction of the euro, which now binds 19 nations into a single currency zone watched over by the European Central Bank but leaves budget and tax policy in the hands of each country, an arrangement that some economists believe was doomed from the start.
Since Greece’s debt crisis began in 2010, most international banks and foreign investors have sold their Greek bonds and other holdings, so they are no longer vulnerable to what happens in Greece. (Some private investors who subsequently plowed back into Greek bonds, betting on a comeback, regret that decision.)
And in the meantime, the other crisis countries in the eurozone, like Portugal, Ireland and Spain, have taken steps to overhaul their economies and are much less vulnerable to market contagion than they were a few years ago.
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