Contagious Effects of Greece Crisis on Euro-Zone States

The purpose of this study is to deeply examine the contagious effects of Greece financial crisis on other European countries. Furthermore, aim of this study is also extended to see how a common currency plays a part to make this crisis worst. Although Greece is the member of Euro-Zone and since November 2009 it is obvious that the main reason of this crisis was the fall of budget deficit and public debt. Greek government feel like millions to accept the rescue plans designed and financed by the IMF and European Union. Many austerity packages were floated and implemented during crisis period. This paper showed that global imbalances and financial crisis are the invention of common causes. The approach adopted in this paper is to answer the questions like “which domestic & international factors provide basis for this crisis?”, “how this crisis became threatened for the Euro states?”, “How this crisis can be dangerous in global perspective?” and “What measure the Greek government should take to cope with this crisis?”. For this purposed related literature has been incorporated. The associated factors of this crisis were the Governments inefficiency, high external debt ratio, common currency, non cooperative behavior from other countries, corrupt politicians. Recently developed long past time series on public debt, along with modern figures on external debts, allows a deeper study of the cycle causal successive debt and banking crisis. The facts confirms a strong relation between banking crisis and sovereign evasion crosswise the financial history of great many countries, advanced and emerging alike. The study may serve as the foundation of future study in terms of devaluation of Euro to cope with this crisis. Devaluation of currency provides the bases of political stability, economic growth and boosting exports which helps to undertake this crisis.