Abstract:

The European sovereign debt crisis explains the period that low interest rates make government and private debt high and also financial crisis transform this debt to high sovereign debt. In this period, low interest rates made government borrowing cost cheap and so sovereign debt increased considerably. In the same period, private sector consumption and debt rose and this induced the housing bubbles. The expansionary fiscal policy against the effects of the global financial crisis and bail-outs given to banks which are problematic made the sovereign debt highest and debt here unstainable for some countries. In this respect, it is worthwhile researching the European sovereign debt crisis which is multifaceted and complex and offering suggestions for Turkey. Turkey must maintain a strong fiscal position and increased country resilience to the crisis. And Turkey must also maintain banking regulation and supervision which are intended for a steady financial sector. The aim of this paper is to analyze the stages of development of the European sovereign debt crisis and its reasons; and also emphasizing the actions Turkey can take and offer suggestions for Turkey

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