ABSTRACT
As the new millennium opened to a fanfare of celebrations across the Continent, there seemed every reason to be sanguine about the prospects facing the European economy and especially for the engine of its growth, the European Union. In January 2002, the euro became legal tender as six billion new banknotes and 37 billion new coins came into circulation, with optimists predicting it would deepen integration and usher in a new upward growth trajectory. The European Central Bank pronounced that the single currency heralded the ‘dawn of a new age’. Yet in retrospect it is evident that in this period of heady optimism, the seeds were sown for a severe global economic downturn originating in the flagging United States before the end of the first decade of the twenty-first century. Globalization, the interconnectedness of the world banking system and loosened financial regulations lay at the heart of this crisis, which engulfed European economies to different degrees. Between 2002 and 2008, there was a worldwide surge in cheap and irresponsible lending that formed the prelude to a severe downturn in the mature economies, which first afflicted the American economy and quickly spread to Europe.
