European Sovereign Debt Crisis: Causes, Effects And Enlightenment

European sovereign debt crisis threatens the stability of global financial system, and interferes with the process of global economic recovery. Greece, Ireland and Portugal dominoes have fallen, helplessly reaching out for assistance from the European Union and the International Monetary Fund, and relief funds are of unprecedented scale and intensity. Currently, major developed economies generally face the challenges of fiscal deficit and debt burden, while population aging and labor market rigidities will further deteriorate the situations of its sovereign debt. Therefore, economies with high level of indebtedness should carry out implementation of effective and credible medium-term fiscal consolidation plans urgently, strengthen the reform of welfare and tax system, supplemented by financial sector and economic structure reform, and strengthen macro-prudential supervision, in order to ensure sustainable growth of fiscal deficits, debt and economic development.