Introduction European debt crisis refers to the challenges that Europe is undergoing when paying for the debts built and accumulated over decades of financial instability. Five of the world’s largest economies including Greece, Portugal, Ireland and Spain in one way or the other have failed to generate a stable economic growth to cater for their debts. Previously, these countries only considered challenges caused by the crisis; it is now going beyond borders and is affecting the whole world. Europe is currently facing a serious financial crisis; debts accumulated by the member nations of European Union have raised questions about the effectiveness of European Economic and Monetary Union and what holds of euro in the coming days. Sovereign debt is considered to be the main cause of Euro crisis. However, most of the affected countries including Greece, Ireland, Portugal and Spain, and other smaller economies that are linked to Euro zone, have severe monetary problems (Lynn, 2010). The root of the crisis was a result of misallocation of resources and loss of completion within these countries. This was after the adoption of Euro about ten years ago. Currently, the economic problem is no longer the cause of the crises but a consequence brought by the changes. The worldwide financial crisis associated with Greece raised an alarm about the debt crisis that was facing the Euro zone. The International Monetary Fund and the European Union have attempted to regain confidence in the unstable economies of Greece, Portugal and Ireland. Revealing of financial situation in Greece raised doubts on its capability to pay its debts (Kolb, 2011). The sovereign debt that had faced these economies has continued to threaten the international monetary fund in trying to save the financial market. In addition, the spread of crisis to bigger economies like Spain and Italy poses a greater risk making the crisis more complicated. For this reason, a lot of questions have been raised about the effectiveness of IMF and European Union. This has brought doubts concerning the future of these international monetary organizations not forgetting the fact that recovery of these debts seems futile. Before the start of the crisis around the year 2007, the condition over the public finances was strongest over decades due to promising economic situations. The worldwide financial crisis around 2009 hit the economic activity of European countries in three different ways. It polluted the financial system and its connectivity; it shook the confidence in wealth and demand and infected the worldwide trade actions. General preview indicated that the sub-prime lending came from US, but in the real state, the financial bodies are large in the UK and the Eurozone. Basically the remaining financial bodies of these areas have lost considerable value. The Euro debt crisis resulted from different causes. Some of the major causes include globalizing of money; simple loans around the year 2006 that encouraged risk lending and borrowing; worldwide imbalance of trade; monetary policies concerning government expenses and revenues and bailing out of worthless banks using private bonds (Braga & Vincelette, 2010). Ireland banks loaned property developers without assessing their credibility. Eventually, the gove