Get to know PIIGS, an alliance of 5 European countries that caused the monetary crisis in Europe. Photos/Illustrations
JAKARTA – PIIGS is an alliance of five countries. This alliance was once considered to be the cause of the monetary crisis in the European region in 2008.
The 2008 global financial crisis was a negative economic shock that caused the economies of countries in the European region to deteriorate. As a result, countries that have debts cannot repay the loans they have obtained.
Get to know PIIGS, the 5 Country Alliance in the European Region
PIIGS is an acronym that has been around since the late 1970s. This acronym identifies underperforming countries such as Portugal, Italy, Ireland, Greece and Spain.
But in 2008 or when the global financial crisis occurred, Ireland decided not to join the alliance. Ireland realized that the alliance had plunged its economy into unmanageable debt levels.
During the sovereign debt crisis in the European region, the European Union provided two bailouts to prevent the Greek economy from defaulting. While Greece itself received the first bailout and rejected the second.
Meanwhile, the European Central Bank also issued a $750 million euro rescue package that was used to prop up Greek bonds on the secondary market. Ireland and Portugal received the bailouts.
Quoted from the investopedia page, apart from the European Central Bank, France and Germany, which incidentally are the core industrial economies of the European Union, also play a key role in providing debt relief for the economies of the five alliance countries.
Not to forget, they also made every effort to support the PIIGS bailout by restoring international credit market confidence so that the five countries could return the money they had borrowed.
Unlike the United Kingdom, on 23 June 2016, they preferred to leave the European Union. They assume that the unpopularity of the European Union is caused by issues of immigration, sovereignty and the existence of countries suffering from prolonged recessions.
However, at the end of 2018, the debt problems of peripheral countries such as the PIIGS alliance began to subside. Moreover, the last report for 2018 has shown an increase in investor sentiment towards periphery countries.
Finances and debts from peripheral European countries are now decreasing and the country’s economic level is getting better. Even so, the acronym PIIGS as a country constraining the European Union’s economy is still used today.