The Treaty on European Union

The Treaty on European Union, known as the Treaty of Maastricht, was signed in the Dutch city of Maastricht on February 7, 1992, before entering into force in 1993. It created the structure for a single currency, later named the euro, to be born. The currency's symbol was inspired by the Greek letter epsilon, with the notes and coins available by 2001. They were issued by the European Central Bank, which was based in Frankfurt to placate Germany's loss of its beloved Deutschmark.

The final structure was a bloc in which political and fiscal integration was minimal; The euro was not designed to create a 'United States' of Europe. Instead the Maastricht Treaty created specific conditions for entry into the single currency. Among other criteria, member countries must not allow annual budget deficits to exceed 3% of gross domestic product, and public debt must be under 60%.

The weaker economies are Greece, Portugal, Ireland, Italy and Spain, a group which gained the unwanted acronym PIIGS as the crisis unfolded. Other members are Austria, Belgium, Cyprus, Finland, Luxembourg, Malta, the Netherlands, Slovakia, Slovenia with the most recent edition, Estonia, joining in January this year. Sweden does not belong to the eurozone but is obligated to do so in the future, according to the terms of the treaty.

 Then came Black Wednesday, the day in 1992 on which Britain was forced to halt its membership of euro's precursor, the European Exchange Rate Mechanism. Black Wednesday was seen as proof a monetary union and European currency could not work, says Hans-Joachim Voth, research professor of economics at Barcelona's Universitat Pompeu Fabra.

The country was hit with ratings downgrades, pushing its sovereign bonds into so-called "junk" territory, and the damage continued to spiral. Despite the introduction of brutal austerity measures - which have prompted waves of violent protests - Greece has been unable to balance its books. There is a risk it could be forced out of the eurozone.

While the countries which have been bailed out have specific problems -- Greece's lax tax collection, and Ireland's black hole of a banking system, for example -the problem has been exacerbated by a currency which shackles the weak to the strong, economists say. Political difficulties in driving through a decisive plan for reining in the crisis has fed the panic.

A default by Greece, or its departure from the eurozone, also carries contagion risk. That means investors will worry about other nations in trouble - such as Italy, which makes up 17% of the eurozone economy, nearly seven times bigger than the economy of Greece - and further increase financial instability across the globe.
Politically, it will ignite the debate about whether the European dream, and the euro, can survive, and if it should have even been created in the first place.