European Sovereign Debt Crisis and its Impact on Financial Markets and Institutions

Abstract

This paper examines the European sovereign debt crisis that began in 2009; it mostly considers Greece and then Italy and Portugal since they were affected by the crisis. It gives the emergence and the causes of the crisis as well as its effect on their debt as a percentage to Gross Domestic Product and their Real Gross Domestic Product. It also analyses the impact on sovereign bond and its yields, the stock, gold, derivatives and forex markets, including the impact on financial institutions, it uses graphical illustrations from Bloomberg to back the analysis. It further assesses the measures taken so far by policy makers and financial institutions to curb the situation. It finally considers the impact of the crisis on financial landscape and lessons learnt from it.