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Coronavirus – Economic Issues

Economy in lockdown: On India’s worst-case scenario

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- A stimulus package to deal with the economic disruption of pandemic is suggested by various experts. What should be its size and how effective it would be in your opinion?

This op-ed discusses the latest projections by the IMF. The latest projection and suggestions by IMF are the bleak reminder of economic disruption we have been experiencing.

IMF discards its previous projections

  • Less than two months ago, IMF had asserted that “global growth appears to be bottoming out” (i.e. announcing the worst is over).
  • But the pandemic induced ‘Great Lockdown’ has forced the IMF to junk all its previous projections for economic output in 2020.
  • Faced with the stark reality of sweeping shutdowns of almost entire economies worldwide, the fund last week acknowledged that the current “crisis is like no other”.
  • The IMF slashed its projection by 6.3 percentage points from its January forecast for 3.3% growth to a 3% decline.
  • This is the sharpest contraction in world output since the Great Depression of the 1930s.
  • Comparison with 2009 slowdown: In contrast, the recession of 2009 saw world output contract by a mere 0.1%.
  • The IMF was blindsided by the comments from Chinese authorities and WHO.
  • Which is clear from the fact that as recently as February 22, the fund’s chief, Kristalina Georgieva, told G20 Finance Ministers that “global growth would be about 0.1 percentage points lower” than forecast in January.
  • China’s GDP, she projected, would expand by 5.6% this year, 0.4 percentage points slower than assumed in January.

Latest projections for China by the IMF

  • Last week, the IMF slashed China’s forecast to a growth of 1.2%, citing data on industrial production, retail sales, and fixed asset investment that, it said, suggested a contraction of about 8% in the first quarter.
  • China reported a 6.8% first-quarter contraction.
  • Still, in projecting an annual expansion in Asia’s largest economy, the fund is rather optimistically foreseeing a sharp rebound in activity over the rest of the year.

The following data of the revised projections gives us an idea about the extent to which the crisis has been damaging the economy. There are also suggestions about the strategy to deal with the crisis and that includes a stimulus package.

Projections and suggestions for India

  • On India, the IMF has cut its projection for growth in the fiscal year that started on April 1, from January’s 5.8%, to 1.9%.
  • This projection is base on two assumptions given below.
  • 1. This again appears predicated on the fund’s baseline scenario that assumes that the pandemic would ‘fade in the second half of 2020’, allowing containment efforts to be unwound and economic activity to normalise.
  • 2. Another key assumption by the IMF’s economists is the availability of policy support to nurture the revival once activity restarts.
  • Suggestion for India: Jettisoning its storied fiscal conservatism, the IMF’s chief economist, Gita Gopinath, has advocated ramping up a broad-based and coordinated stimulus once the disease has been contained.
  • Such measures would help avoid the errors of the Great Depression years when premature efforts to prune budget deficits prolonged the downturn.
  • Inadequate fiscal measures in India: In this context, India’s fiscal measures pale in terms of scale when compared with what several other nations have undertaken.

Conclusion

Given the size of the informal sector in India as well as the anticipated prolonged disruption in labour supply even in more formal parts of the economy, the Centre needs to proactively commit to a substantial stimulus package in order to ensure that once the economy reopens, it has the legs to run.

FDI in Indian economy

 Indian’s decision on FDI to stop predatory Chinese hunt for Indian companies

Note4Students

From UPSC perspective, the following things are important :

Prelims level : FDI in India.

Mains level : Paper 3- Implications of growing Chinese investment in India.

This editorial discusses the implications of growing Chinese investment in India. After People’s Bank of China bought 1 per cent stake in HDFC bank, Indian government made prior government approval mandatory for investment from countries sharing border with India. Various aspects of the move are discussed here.

No separating commerce and security in dealing with China

  • India’s move to prevent a predatory Chinese hunt for Indian companies comes at a time when the stock market has been badly bruised by the coronavirus.
  • It underlines the emerging perception in India that there is no separating commerce and security in dealing with China.
  • India’s concerns are similar to those being expressed elsewhere in the world.
  • A number of European countries have already moved in that direction.
  • In recent years, apprehensions have grown, in both the developing and developed world, that China is targeting their infrastructural, industrial and technological assets for control.
  • But many governments were willing to give the benefit of doubt to Beijing.
  • That willingness has rapidly eroded in the wake of the corona crisis that has devastated the Western world.

Taking economic advantage of other nation’s misery

  • Although few world leaders want to join the US President in publicly attacking China.
  • Many of them know that Beijing bears some responsibility for letting a health emergency in one of its cities become a global pandemic.
  • That Chinese companies, with access to easy money and strong political support in Beijing, are now taking economic advantage of other nations’ misery has added insult to injury.
  • While most leaders are preoccupied with the corona crisis, they are not likely to let Beijing have its way.
  • Even in Britain, where the Boris Johnson government is now taking a second look.
  • Last week, the British Foreign Secretary, said there will be no going back to “business as usual” with China.

China’s growing influence has been posing challenges for India on various fronts. Its growing footprint on India’s economy is one of such challenges. The UPSC frames question in relation to China from various angles. So, the penetration of China in India economy is also an important aspect from the Mains perspective.

Rethinking the commercial engagement with China

  • Beyond the question of accountability for the spread of the coronavirus, many countries are rethinking the very nature of their commercial engagement with China.
  • Gaming the system by China: On a host of issues ranging from trade and investment to intellectual property protection, there is an inescapable sense that China has gamed the global system for unilateral gains.
  • India late in learning: India certainly has had a longer learning curve than the West in recognising the relationship between commerce and national security.
  • Since the early 1990s, Delhi bet that expanding economic cooperation with China will help mitigate political disputes.
  • But the differences have only become intractable even as China became stronger economically.
  • India gave China an easy pass into the WTO.
  • India’s trade deficit: It let cheap imports from China undermine India’s manufacturing sector and run up a massive trade surplus.
  • India allowed massive Chinese penetration of its telecom, digital and other advanced sectors only to discover the multiple negative consequences.
  • India’s new approach: The last few years have seen a new approach that has seen India oppose China’s Belt and Road Initiative and walk out of the RCEP negotiations citing the trade imbalance with China.

Conclusion

The decision on Chinese FDI can be seen as one of the piece of the puzzle India has to face on the various front. But the puzzle of dealing with a rising China’s strategic economic onslaught will test India for a long time.

Coronavirus – Health and Governance Issues

Beijing’s response to Covid underlines that the world needs more democracy, not less

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- How effective is the democratic system in dealing with the pandemics like Covid-19?

The article deals with the fundamental differences between democratic states and one-party state against the backdrop of response to Covid-19. The second part of the article focuses on post-Covid-19 scenarios like changes in the supply chains and the state of the China’s economy.

Two aspects of Chine’s propaganda campaign

  • China, with the lack of transparency inherent in its one-party authoritarian system, contributed to the spread of Covid-19.
  • There is a desperate effort on the part of China to erase its culpability in unleashing COVID-19 across the world.
  • It has sought to overcome the damaging global public opinion which it has suffered by a subsequent sustained propaganda campaign.
  • This has two aspects.
  • 1. Highlighting the success: One highlights the success China claims to have achieved in arresting the pandemic within the country through drastic measures on a massive scale.
  • Thereby demonstrating the superiority of its authoritarian system.
  • This authoritarian system is contrasted with the delayed and often less-than-effective measures taken in democratic European countries and the US in particular.
  • 2. Publicity of assistance provided to other countries: The other seeks blanket publicity of much-needed medical equipment and medical teams to assist affected countries.
  • The main target is Europe, though assistance to other countries is also given prominence.
  • Chinese diplomats are using Twitter, Facebook and other social media platforms to create an image of a benign China providing public goods to a grateful community of beleaguered nations.
  • In reporting on India, Chinese media has often highlighted the plight of migrant workers and the frequent violations of social distancing regulations.
  • It is true that India has sought and received much-needed medical supplies from China.

What China would like us to believe?

  • China wants us to believe that COVID-19 virus did erupt in Wuhan, but it may not have originated in China.
  • That there may have been a delay in acknowledging the seriousness of the crisis, but this was due to missteps by the local leadership in Wuhan city and Hubei province.
  • Once the gravity of the situation was recognised, Chinese leaders promptly informed the WHO and shared the DNA sequence of the virus with it and other countries.
  • The unprecedented measures adopted by Chinese authorities bought valuable time for the rest of the world to get prepared to deal with the pandemic.
  • Having achieved notable success in arresting the spread of the virus, valuable assistance is now being provided to affected countries in the spirit of solidarity.
  • China’s economy is beginning to recover and this will contribute to the recovery of the global economy.

China has been highlighting its success in dealing with Covid-19 as an achievement of its single-party system. So, it is important to understand why it is not entirely true. And UPSC can frame a question like “To what extent has democratic system helped India in dealing with the corona crisis? “. Following points highlight the advantages of democracy in this regard.

Democracy Vs. One-party system

  • Has China demonstrated the superiority of China’s one-party system as compared to democracies? No!
  • There is no escaping the fact that COVID-19 may not have become a pandemic if China were a democracy.
  • With a free flow of information through an independent media and accountable political leadership, the rest of the world would have been alerted in time.
  • There are democracies which have done as well if not better than China without resorting to its sledgehammer tactics.
  • Notably, there is Taiwan, which is constantly bullied by China.
  • There is South Korea, which has even held parliamentary elections after having brought the pandemic under control.
  • Even in India, the government is providing daily updates on the spread of the virus.
  • Conclusion: The bottom line is that as a result of being a democracy, we have a better chance of knowing the true dimensions of the crisis.
  • With the democracy we have a better chance of being able to obtain constant feedback on people’s reactions and access the best advice from multiple sources.

China’s assistance and resentment against it

  • One must acknowledge China’s assistance to affected countries despite reports of defective and low-quality materials.
  • But recipients have often been “persuaded” to express fulsome praise for China.
  • This accompanying publicity overdrive has caused resentment rather than gratitude
  • Then there have been reports from Guangzhou on racial discrimination against stranded African students.
  • This has led to a sharp reaction from African countries.
  • This will be difficult to live down.

The revival of China’s economy

  • There is no doubt that economic activity in China is beginning to revive after a steep drop of 6.8 per cent (year on year) in GDP during the first quarter of 2020.
  • Latest estimates are that the Chinese economy is now functioning at about 80 per cent of the level last year, which is impressive.
  • Less dependence on export: China’s economy is not as export-dependent as it has been in the past.
  • Exports were 5 per cent of GDP in 2018 against 32.6 per cent in 2008.
  • But the external economic environment is critical for China’s globalised economy.
  • It is a significant node in the most important regional and global supply chains.

Changes in supply chains in the future and opportunity for India

  • China’s position as a significant node will be impacted by countries re-shoring production or opting for shorter and closer-to-home supply chains.
  • Japan will spend $2.2 billion to assist Japanese companies to shift units from China back to Japan or relocate to South East Asia.
  • In 2012, when China-Japan tensions were at a peak, there was a similar move and India was seen as an alternative.
  • But that opportunity was lost. Perhaps India has a second chance.
  • Decoupling from the US economy: China will suffer from accelerated “decoupling” from the US economy with COVID-19 sharpening the already fraught bilateral relations.
  • In a sense, China was already decoupled from the US by denying entry to US tech giants, Google, Facebook, Microsoft and Amazon.
  • This even while its own tech multinationals like Huawei and Alibaba have built markets in the West.
  • This cannot be sustained.
  • The winners in the more digital world which will emerge post-COVID-19 will be the American tech giants, even though the US is politically dysfunctional.
  • Democracies sometimes win even if their politics is frustrating.

Conclusion

Rather than express envy of Chinese authoritarianism, Indians should be thankful that we are a democracy. We need more democracy, not less, to overcome the COVID-19 challenge. India should also be ready to grab the opportunities in the post-Covid-19 era in the economic realms.

Banking Sector Reforms

How reverse repo rate became benchmark interest rate in the Indian economy?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : LTRO, Repo and Reverse repo rate

Mains level : Read the attached story

Context

  • The Indian economy’s slowdown during 2018 and 2019 is becoming much worse in 2020 with the spread of COVID-19 and the stalling of almost all economic activity.
  • Like most other central banks in the world, the RBI, too, has tried to cut interest rates to boost the economy.
  • However, unlike in the past, when the RBI used its repo rate as the main instrument to tweak the interest rates, today, it is the reverse repo rate that is effectively setting the benchmark.

We can expect a straight forward question based on this newscard.  For example:  “Critically examine the efficacy of reverse repo rate as benchmark interest rate in the Indian economy. “

What are repo and reverse repo rates?

  • The repo rate is the rate at which the RBI lends money to the banking system (or banks) for short durations.
  • The reverse repo rate is the rate at which banks can park their money with the RBI.
  • With both kinds of the repo, which is short for repurchase agreement, transactions happen via bonds — one party sells bonds to the other with the promise to buy them back (or repurchase them) at a later specified date.
  • In a growing economy, commercial banks need funds to lend to businesses.
  • One source of funds for such lending is the money they receive from common people who maintain savings deposits with the banks. Repo is another option.

Repo as benchmark

  • Under normal circumstances, that is when the economy is growing; the repo rate is the benchmark interest rate in the economy.
  • This is because it is the lowest rate of interest at which funds can be borrowed and, as such, it forms the floor rate for all other interest rates in the economy.
  • For instance, the interest rate consumers would have to pay on a car loan or the interest rate they will earn from a fixed deposit etc.

What has changed now?

  • Over the last couple of years, India’s economic growth has decelerated sharply.
  • This has happened for a variety of reasons and has essentially manifested in lower consumer demand.
  • In response, businesses held back from making fresh investments and, as such, do not ask for as many new loans.
  • Add to this, the pre-existing incidence of high non-performing assets (NPAs) within the banking system.
  • Thus, the banks’ demand for fresh funds from the RBI has also diminished. This whole cycle has acutely intensified with the ongoing lockdown.

Consequences: Rise in Liquidity

  • As such, the banking system is now flush with liquidity for two broad reasons.
  • On the one hand, the RBI is cutting repo rates and other policy variables like the Cash Reserve Ratio to release additional and cheaper funds into the banking system so that banks could lend.
  • On the other, banks are not lending to businesses, partly because banks are too risk-averse to lend and partly because the overall demand from the businesses has also come down.

So, how has reverse repo become the benchmark rate?

  • The excess liquidity in the banking system has meant that banks have been using only the reverse repo (to park funds with the RBI) instead of the repo (to borrow funds).
  • As of April 15, RBI had close to Rs 7 lakh crore of banks’ money parked with it.
  • In other words, the reverse repo rate has become the most influential rate in the economy.

What has the RBI done?

  • Recognising this, the RBI has cut the reverse repo rate more than the repo (see graph) twice in the spate of the last three weeks.
  • The idea is to make it less attractive for banks to do nothing with their funds because their doing so hurts the economy and starves the businesses that genuinely need funds.

Will the move to cut reverse repo, work?

  • It all depends on the revival of consumer demand in India.
  • If the disruptions induced by the outbreak of novel coronavirus continue for a long time, consumer demand, which was already quite weak, is likely to stay muted.
  • Businesses, in turn, would feel no need to borrow heavily to make fresh investments.
  • If consumer demand revives quickly, the demand for credit will build up as well.

Concerns of lower reverse repo

  • From the banks’ perspective, it is also important for them to be confident about new loans not turning into NPAs, and adding to their already high levels of bad loans.
  • Until banks feel confident about the prospects of an economic turnaround, cuts in reverse repo rates may have little impact.

Back2Basics: Long Term Repo Operations (LTRO)

  • The LTRO is a tool under which the RBI provides 1-3 year money to banks at the prevailing repo rate, accepting government securities with matching or higher tenure as the collateral.
  • Funds through LTRO are provided at the repo rate.
  • But usually, loans with higher maturity period (here like 1 year and 3 years) will have a higher interest rate compared to short term (repo) loans.
  • According to the RBI, the LTRO scheme will be in addition to the existing Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF) operations.
  • The LAF and MSF are the two sets of liquidity operations by the RBI with the LAF having a number of tools like repo, reverse repo, term repo etc.

International Monetary Fund,World Bank,AIIB, ADB and India

SDR general allocation by IMF

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SDR mechanism

Mains level : Issues with SDR mechanism

  • Finance Minister has said that India could not support a general allocation of new Special Drawing Rights (SDR) by the IMF because it might not be effective in easing coronavirus-driven financial pressures.
  • FM Nirmala Sitharaman has stated that such a global liquidity boost by the IMF could produce potentially costly side-effects if countries used the funds for “extraneous” purposes.

Details of SDR mechanism:

What is SDR?

  • The SDR is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries.
  • To participate in this system, a country was required to have official reserves.
  • This consisted of a central bank or government reserves of gold and globally accepted foreign currencies that could be used to buy the local currency.
  • It is based on a basket of international currencies comprising the U.S. dollar, Japanese yen, euro, pound sterling and Chinese Renminbi.
  • It is not a currency, nor a claim on the IMF, but is potentially a claim on freely usable currencies of IMF members.
  • The value of the SDR is not directly determined by supply and demand in the market but is set daily by the IMF on the basis of market exchange rates between the currencies included in the SDR basket.

Who can hold SDRs?

  • SDRs can be held and used by member countries, the IMF, and certain designated official entities called “prescribed holders”.
  • It cannot be held, for example, by private entities or individuals.
  • Its status as a reserve asset derives from the commitments of members to hold, accept, and honour obligations denominated in SDR.
  • The SDR also serves as the unit of account of the IMF and some other international organizations.

General allocation of SDRs

  • An SDR allocation is a low-cost way of adding to members’ international reserves, allowing members to reduce their reliance on more expensive domestic or external debt for building reserves.
  • The IMF has the authority under its Articles of Agreement to create unconditional liquidity through “general allocations” of SDRs to participants in its SDR Department (currently, all members of the IMF) in proportion to their quotas in the IMF.

The SDR Interest Rate

  • The interest rate on SDRs, or the SDRi, provides the basis for calculating the interest rate that is charged to member countries when they borrow from the IMF and paid to members for their remunerated creditor positions in the IMF.
  • It is also the interest paid to member countries on their own SDR holdings and charged on their SDR allocation.
  • The SDRi is determined weekly based on a weighted average of representative interest rates on short-term government debt instruments in the money markets of the SDR basket currencies, with a floor of five basis points.

How many SDRs have been allocated so far?

The general SDR allocation of August 28, 2009 is by far the biggest allocation to date:

  • SDR 9.3 billion was allocated in yearly installments in 1970–72.
  • SDR 12.1 billion was allocated in yearly installments in 1979–81.
  • SDR 161.2 billion was allocated on August 28, 2009.

What happens to the SDRs once they are allocated?

  • The IMF’s SDR Department keeps records of members’ SDR allocations and holdings; the SDR Department is also the channel through which all transactions and operations involving SDRs are conducted.
  • Once allocated, members can hold their SDRs as part of their international reserves or sell part or all of their SDR allocations.
  • Members can exchange SDRs for freely usable currencies among themselves and with prescribed holders; such exchange can take place under a voluntary arrangement or under designation by the Fund.
  • IMF members can also use SDRs in operations and transactions involving the IMF, such as the payment of interest on and repayment of loans, or payment for future quota increases.

Issues with new allocations

  • New reserves are allocated according to members’ quotas — or shares in the IMF.
  • A great deal of the benefit in 2009 went to advanced economies that didn’t need help in accessing markets or financing fiscal deficits.
  • If the same system is being used now, only 40 per cent of the total would be given to the emerging economies. That is not good enough.

Other reasons

  • The possible extraneous purposes FM could be referring to maybe misuse of resources for terror funding or some such purpose by neighbours.
  • This may seem far-fetched to some, but is par for the course for the government.
  • The other possibility is that India is merely trying to prove its loyalty to the Trump administration.
  • India has already requested to access the US Fed’s currency swaps.

ISRO Missions and Discoveries

[pib] What is Big Bang Nucleosynthesis (BBN)?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Big Bang Nucleosynthesis (BBN)

Mains level : BBN and its significance in the formation of our solar system

Indian researchers have discovered hundreds of Li-rich giant stars produced during BBN indicating that Li is being produced in the stars and accounts for its abundance in the interstellar medium.

Most of the space based theories and missions are focussed on the formation of our solar system. BBN is the most basic auxillary among them.

What is Big Bang Nucleosynthesis (BBN)?

  • BBN is the production of nuclei other than those of the lightest isotope of hydrogen during the early phases of the Universe.
  • Primordial nucleosynthesis is believed by most cosmologists to have taken place in the interval from roughly 10 seconds to 20 minutes after the Big Bang.
  • It is calculated to be responsible for the formation of most of the universe’s helium in various isotopic forms.
  • Essentially all of the elements that are heavier than lithium were created much later, by stellar nucleosynthesis in evolving and exploding stars.

Lithium in space

  • Lithium (Li), is one of the three primordial elements, apart from Hydrogen and Helium (He), produced in the Big Bang Nucleosynthesis (BBN).
  • However, the present measurement of Li in the interstellar medium and very young stars is about 4 times more than the primordial value.
  • Thus, identifying sources of Li enrichment in our Galaxy has been a great interest to researchers to validate BBN as well as a stellar mixing process.
  • In general, stars are considered as Li sinks. This means that the original Li, with which stars are born, only gets depleted over stars’ life-time as Li burns at relatively very low temperatures.

ISRO Missions and Discoveries

[pib] What are Blazars?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Blazars

Mains level : Black Holes, Blazars

Researchers from the Indian Institute of Astrophysics (IIA), Bangalore have conducted the first systematic study on the gamma-ray flux variability nature on different types of Blazars.

Strange terminologies from space-based studies are very important from prelims point of view.  We can expect a statement based question seeking to identify the term which is being referred to in the paragraph.

What are Blazars?

  • At the center of most galaxies, there’s a massive black hole that can have mass of millions or even billions of Suns that accrete gas, dust, and stellar debris around it.
  • As these material falls towards the black hole, their gravitational energy gets converted to light forming active galactic nuclei (AGN).
  • A minority of AGN (~15%) emit collimated charged particles called jets travelling at speeds close to the speed of light.
  • Blazars are AGN whose jets are aligned with the observer’s line of sight.
  • Some blazars are thought to host binary black holes in them and could be potential targets for future gravitational-wave searches.

Studying blazars

  • Blazars are the most luminous and energetic objects in the known universe were found to be emitters of gamma-rays in the 1990s.
  • It is only with the capability of Fermi Gamma-ray space telescope (launched in 2008) to scan the entire sky once in three hours one is able to probe the flux variability characteristics of blazars on a range of time scales.
  • Gamma-ray band is one of the bands of the electromagnetic spectrum on which there is limited knowledge on the flux variability of blazars.
  • Major problem while studying them is to localize the site for the production of gamma-rays.

Significance

  • The study of blazars could provide clues to the processes happening close to the black hole, not visible through direct imaging.
  • Exploring blazars will provide key inputs to constrain the high energy production site as well as the high energy emission processes.

Matterhorn Mountain of the Swiss Alps

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Mt. Matterhorn and its location

Mains level : Not Much

Switzerland has expressed solidarity with India in its fight against the coronavirus pandemic by projecting the tricolour on the famous Matterhorn Mountain in the Swiss Alps.

It has been long time since a question on global mountains/mountain ranges has not been asked in the prelims. Gear up for the uncertainty. Make a special sheet of geographical locations in news.

Mt. Matterhorn

  • The Matterhorn is a mountain of the Alps, separating the main watershed and border between Switzerland and Italy.
  • It is a large, near-symmetric pyramidal peak in the extended Monte Rosa area of the Pennine Alps, whose summit is 4,478 metres.
  • It is one of the highest summits in the Alps and Europe (Mont Blanc being highest).
  • The four steep faces, rising above the surrounding glaciers, face the four compass points and are split by the Hörnli, Furggen, Leone/Lion, and Zmutt ridges.

Its formation

  • The Matterhorn is mainly composed of gneisses originally fragments of the African Plate before the Alpine orogeny.
  • The mountain’s current shape is the result of cirque erosion due to multiple glaciers diverging from the peak, such as the Matterhorn Glacier at the base of the north face.

Back2Basics: Alps mountain range

  • The Alps are the highest and most extensive mountain range system that lies entirely in Europe.
  • It stretches approximately 1,200 kilometres across eight Alpine countries (from west to east): France, Switzerland, Monaco, Italy, Liechtenstein, Austria, Germany, and Slovenia.
  • The mountains were formed over tens of millions of years as the African and Eurasian tectonic plates collided.
  • Extreme shortening caused by the event resulted in marine sedimentary rocks rising by thrusting and folding into high mountain peaks such as Mont Blanc and the Matterhorn.
  • Mont Blanc spans the French–Italian border, and at 4,809 m (15,778 ft) is the highest mountain in the Alps.