Reference no: EM132425180

Part 1: Respond to the follow discussion:

From the e-Activity, based on your research of the current EURO currency crisis, predict the future of the currency, including the impact the financial investment and risk within the EURO zone for financial institutions. Provide support for your prediction and evaluation.

Part 2: Respond to the follow classmate's discussion:

"The EURO crisis is rooted in the potential defaults by multiple European countries. The declining health of various country's economies caused worries of a further EURO zone crisis. Causes of the crisis was the fact that there were no set penalties for nations who breached the debt-to-GDP set ratios. Exports became less competitive due to the benefits of the euro's power. Low-interest rates and increased capital led to increased liquidity, thus increased wages and prices. Countries using the euro couldn't cool inflation. Lastly, economic growth was slowed, thus increasing unemployment, decreasing consumer spending, and reducing lending capital. A treaty was approved "where EU leaders agreed to create a fiscal unity parallel to the monetary union that already exists." As of now, growth is still slowed but remains positive. Consumer consumption is a key to growing the Euro zone economy. Growth has steadily come more from the consumer market rather than investing or trading. The strong labor market is a huge factor in private consumption. Consumer confidence is still growing positively. The labor market and consumer activity will need to be monitored in order to make proper forecasts. The current outlook seems positive, but is still on the fence."