A report in 2009 by the European Commission on the Economic Crisis in Europe highlighted the need for a framework in crisis prevention, mitigation, control and resolution.

The crisis would have not worsened if this structure on financial crisis deterrence was put in place much earlier by if EU policymakers.

As explained by the Commission, "the first steps have also been taken to redesign financial regulation and supervision - both in Europe and elsewhere - with crisis prevention in mind. Most recently, the European Commission has adopted draft legislation to create a new European Systemic Risk Board to detect risks to the financial system."

This oversight could be one of the reasons that caused the degeneration of the European economy and slowed down global growth.

Reuters reported that a U.S. Treasury Department official has observed that this has resulted in the weakening of equity markets both in the U.S. and Europe.

The department's assistant secretary for international finance preferred to describe the instability in financial markets has diminished risk appetite, damaged business and consumer buoyancy and trimmed down household wealth in the two regions.

Collyns added that "while direct exposure to the Euro zone periphery is very limited, the exposure of U.S. banks to the core European banks is bigger in scope and these banks are the primary international lenders to peripheral European borrowers," according to Reuters.

The EC's findings stressed that financial distress has produced substantial output losses which were never completely recovered. "Estimates emerging from econometric work by the European Commission and simulations with its QUEST model put the potential output loss at up to 5%. A reversal of financial development weakens the incentives for structural reform, thereby adversely affecting potential growth further. Still, the historical evidence shows that crises also provide great opportunities to undertake far-reaching structural measures."

Observers from all over the world have noted that the European economic is experiencing the worst slump since the 1930s.

Before this happened, Europe was blessed with liquidity and fast credit growth. So far, this tightening could be the worse in the entire history of Europe.