Despite a bloated public sector and high government spending, Greece adopted the euro as its currency in 2001. In 2004, the Greek government admitted it had lied about its annual budget deficit to circumvent the criteria needed to join the euro zone. Greek debt continued to rise until the 2009 crisis erupted when the Greek budget deficit hit 12.9 per cent of its GDP — over four times the EU’s 3 per cent limit. Fast forward to today and Greek banks are on the brink of bankruptcy. These losses in turn threaten the solvency of other European banks, and the long-term viability of the entire euro zone.
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