Wednesday 11 May 2016

Germany is benefiting from the rescue scheme?

People criticize that Germany is benefiting from the rescue scheme and it could hurt the Eurozone economy as a whole. Firstly, we need to know how Germany is benefiting from the rescue scheme. As a creditor, Germany has a dominant position in discussing the economic affairs. During the negotiations, the interests of Germany could be ensured; however the interests of the debtors could be ignored. Such phenomenon has its advantage and disadvantage. The advantage is to give  creditors more incentives to lend their money and this can boost the supply of finance for the economic rescue scheme. With more fundings, the scheme could be effective. However, the disadvantage is that sometimes the interests of creditors and the interests of debtors conflict, when this happens, the scheme could be ineffective and even go badly. In conclusion, the creditors naturally gain some power in such negotiations; however, the debtors need some freedom to use the money as long as the money is used reasonably and effectively.

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