Leaving The Euro?

This year has not been a very good year for the Euro with a lot of very senior financial analysts predicting tough times in the near future for the European single currency. The huge debt EU members were in such as Greece and Ireland and other debt incurred by PIIGS (awesomely named acronym for Portugal, Italy, Ireland, Greece and Spain) has shaken the European bond markets and the value of the Euro has taken a massive plummet and this has cause chaos all through Europe.

The European Monetary Fund have been implementing measures to try and stabilise the Euro including interest changes, bail outs and stimulus packages. Despite this there has been a lot of talk over leaving the Euro and if it is even possible to withdraw from using it. Minting new coins, printing new money and setting up a new treasury management system would not be easy but it is also not impossible.

So what exactly would would a country need to do to withdraw from the Euro? The BBC says that to create a new currency the country would have to convert all existing euro-denominated savings at a fixed rate, treasure management systems would have to be changed, the new currency would have to be distributed and most importantly this would have to be done in a very ordered and fast way.

They would need to reassure businesses and investors that things would be changed over quickly and without any loss because otherwise they run the risk of capital flight, which is when people transfer their money to a safer place abroad and if that happened then the country would risk losing a lot of money out of the economy very quickly.

So will anyone withdraw from the Euro? It’s too early to tell yet, but it wouldn’t be an impossible task if they wanted to do it.

Related posts:

1. Marky Ramone’s Blitzkrieg