European Sovereign Debt Crisis and its Implications for Japan

The Greek sovereign debt crisis that started in 2010 has spread to Ireland, Portugal, Spain, and Italy. In this paper, we look into the deep origin of this crisis by overviewing the history of the European monetary union, the divergent inflation rates, the balance of payment imbalances among euro-area countries, and the role of the European Central Bank during the crisis. This paper summarizes important insights into the possible future developments for the Japanese budget crisis.