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The European economies face disturbing reality: a public debt that is still rising. Although budgetary stability is to be a priority for governments, several European Union countries now show the level of debt that largely exceed 100 % of their GDP. This situation causes questions about macroeconomic risks and potential consequences for financial markets.
Europe under the weight of the debt
The debt trajectory in Europe is evidenced by growing difficulties in mastering public deficits. Indeed, recent data show that six EU countries exceed 100 % of the debt grade compared to their GDP: Greece, Italy, France, Belgium, Spain and Portugal. The French situation is particularly explored because its debt increased by 1.6 %in one quarter, exceeding EUR 3,230 billion.
In this context, the European Central Bank (ECB) faces dilemma. Should we continue to raise rates to contain inflation, risk of growth suppression and further increase in public debt burden? This question divides the observer, especially because some countries, such as Bulgaria (22.1 %) and Estonia (23.8 %), show much more controlled conditions. The possibility of stricter budget intervention could highlight economic and political tensions in the EU.
What impact on markets and crypts?
The vast majority of investors carefully monitor the development of these budget imbalances, as the debt crisis could cause turbulence on traditional financial markets. Loan costs for states are increasing, which has an impact on infrastructure and public service financing. In addition, the increase in interest rates could slow investment, which would affect the growth and stability of the euro.
This instability could strengthen the attraction of alternative assets, especially cryptos. In the context, when trust in traditional currency is tested, investors are looking for shelters outside the classic financial system. Gold and bitcoins, perceived as alternatives to inflation and sovereign risks, could see their acceleration of adoption.
Medium -term perspectives remain uncertain. If the indebted states manage to stabilize their situation thanks to budget reforms, the market confidence can recover. In the case of prolonged degradation, however, the volatility of currencies and the search for refuge values can speed up the transition to a decentralized financial model. The colossal debt of some countries could then become an unexpected catalyst for accepting crypts.
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Graduate of Science after Toulouse and holder of Blockchain Consultant Certification, published by Alyrou, joined the adventure of Cointtribuni. The general public about this constantly evolving ecosystem. My goal is to allow everyone to better understand blockchain and take the opportunity they offer. I try to provide an objective analysis of messages every day, decrypt trends on the market, hand over the latest technological innovations and introduce the economic and social issues of this revolution.
Renunciation
The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.