Following our last post it dawned on us. In a world inundated with industry, company, and those obnoxious texting acronyms, how could people be expected to stay abreast on what appears to be an infinite universe of alphabet soup combinations? Add to the fact that each year pop culture idolizes waves of trendy acronyms, and it's only natural that we as humans forget a few of the more fundamental abbreviations that are driving the economy. Case in point is Greece, with the IMF, ECB, and EC; acronyms being thrown around in the media like a beach ball at a Nickelback concert. Risking being caught off-guard or worse asking a colleague for clarification, we decided to step in to help put your anxiety at ease. This is the first part of a series of blog posts designed to help refresh your memory on key theories and concepts, the goal of which is to help turn you into a expert and hero in these subjects at your next water cooler session or dinner party; or at least appear to be.
IMF - International Monetary
The IMF is an international organization consisting of 188 countries working together to foster international monetary support, financial stability, trade, economic growth, and to finally reduce global poverty. Countries working with the IMF contribute to a pool through an quota system, wherein countries that cannot afford can take loans. In that sense the IMF is often referred to as the lender of last resort. Typically when a country goes to the IMF, it is because they have exhausted their other, and have few, if any, for capital support.
So what exactly does that have to do with Greece? Well Greece currently owes more than $20 billion to the IMF, and are struggling to make an upcoming €350 million on its loan.
ECB - European Central Bank
The ECB is the central bank for the Euro, which shoulders the responsibility of running the monetary policy for the Eurozone. Given that the Euro is one of the largest in the world, the ECB is one of the most important central banks in the world. As a central bank, the ECB is responsible for managing the Euro, the rates. During a financial crisis, a central bank will also act the lender of last resort for their respective banking sectors. However, it's the central banks responsibility to try and avoid such scenarios. Which begs the question, how much does Greece owe the ECB? Well, as of February it's something approximating 27 billion euros. (Check the link to see what that actually looks like
EC - European Commission
Last but not least, the EC is the entity that is responsible for running the day-to-day, recommending legislations, and upholding treaties for the European Union. The commission behind the EC is composed of a cabinet government with 28 members, with one member per state. And just in-case you're a little fuzzy on your European Union countries, they consists of: Austria,Belgium,Bulgaria, Croatia, Republic of Cyprus,Czech Republic, Denmark,Estonia,Finland,France, Germany,Greece, Hungary, Ireland,Italy, Latvia, Lithuania, Luxembourg, Malta,Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK. As a member of the commission, Greece's well-being is of some importance to the EC. However, after having dug themselves deeper and deeper into financial disorder and taunted potential lenders with ridiculous claims and terms, many people are beginning to wonder if Greece is worth saving in the commission, or if the Euro would be better off without them. This thought was scowled upon in the post-2008 crisis and is now becoming a potential outcome for Greece.
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