The economies of the so-called PIIGS (Portugal, Italy,
Ireland, Greece and Spain) have dominated the political agenda
in Europe ever since the Greeks started to be unable to pay
their debts in 2010.
This economic euro explosion, stemming from the Greek budget
deficit spiraling out of control, has resulted in threats of it
leaving the single currency and created fears of contagion to
other weak Eurozone countries.
This has resulted in turn in an uncertain future for the
currency that has dominated the agenda in Europe both
politically and economically.
The credit crunch of 2008, which exposed the weaknesses in the
PIIGS economies, has also resulted in increased regulation for
the financial services sector. The direct response from
Brussels to this crisis was the Alternative Investment Fund
Managers Directive and the level two implementation measures
are currently being discussed.
However, the directive has effectively been put on the
backburner by Eurocrats because it is a low priority in
comparison to the potential global financial Armageddon that
could ensue if the euro fails.
But the levels of regulation are set to increase. From Europe
there are new regulations about OTC derivatives, investment
funds, shadow banking, UCITS and a host of others in a
veritable alphabet soup of new acronyms. The European financial
services industry has also been affected by new laws from the
This has resulted in some experts describing the sheer volume
of financial services regulation being consulted upon,
discussed and reviewed as a 'regulatory tsunami’.
Many have complained that the quality of new regulation could
be compromised because of its sheer volume – and that
the rush for quick responses and short consultation periods may
result in weak legislation.
But the focus is still the euro. At this stage we do not know
what countries will be part of the euro in the long or short
term or the potential impact if any countries exit it.
While regulators rush to put out the fire of the euro currency
crisis, another financial crisis could be created, by
regulations that are made in haste, rushed and poorly thought
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