European Debt Crisis And Euro Credit Risk

European debt crisis has serious impact on the euro area’s economic development and the world economy. The Greek sovereign debt crisis broke out with the three international rating agencies cut Greece sovereign credit rating in2009. Then the crisis broke out in Spain, Ireland, Portugal and Italy. European debt crisis not only bring disaster to the European Members, but also bought negative impact on the other countries’economy especially bought bad impact on the stability of the financial market. Even more serious is that the crisis caused market’s trepidation about the euro credit.European debt crisis has become the hottest economic topics currently. Recently many literatures has been studied on the causes and the strategies of the Europe debt crisis, which get some results, but there are not many literatures give reasonable elaborate on the ultimate way for the euro. Based on the characteristic of the single currency in euro area, the non-independence of the economic benefits for Euro area members, the inherent inconsistency of the single currency, and according to the "free rider" phenomenon that caused by the fiscal policy and monetary policy imbalances, this article puts forward the assumption that the fiscal expenditures of the European members are competitive. On these bases, this article first gives the hypothesis some relevant evidence from the point of theoretical analysis and empirical demonstration, next the article analyses the consequences of the competitive financial expenditure in the euro area and reveals the inevitability of the European debt crisis and its impact on the euro credit. Then according to the analysis of the possible evolutionary paths on the debt crisis in Europe the article explores the long-term trend of the euro credit. Finally, in view of China’s actual and development strategy, the article put forward the strategic thinking of how to deal with the Europe debt crisis.The result shows that:in the context of the euro-zone members’competitive expenditure, the European debt crisis is inevitable, and the currency credit crisis triggered by the debt crisis will be inevitable. In the long term, the debt crisis will destroy the euro zone single currency system. But in the short time, the Europe debt is still corrigible and the relief methods including the members’ self-help, district coordination and the third-party’s relief. Compared to the self-help and district coordination assistance, third-party’s relief may be the most realistic value. From the view of the symmetry and stability of the international monetary system, China is the most likely third-party assistance, that is to say, China can play a significant role in rescuing the European debt crisis. In short term, China will suffer economic loss if it relies, but in long term China’s relief will be win-win.