Bloomberg: A Greek exit from the euro area has the potential to be EU’s most economically and politically destructive event of a generation
A Greek exit from the euro area has the potential to be the European Union’s most economically and politically destructive event of a generation.
Bloomberg Opinon, Editors, May 16, 2012 1:00 AM GMT+0200
Unfortunately, Europe has reached the point where it must prepare for such an outcome.
First, Europe would have to absorb immediate losses on money lent to Greece. The country has about 400 billion euros in external debts, which its government, banks and companies would probably pay only in part or in drachmas.
Second, European officials would need a plan to stop bank runs.
As soon as Italian, Portuguese, Spanish and maybe even French depositors see footage of Greeks clamoring for their savings, they’ll want to get their euros out of local banks as quickly as possible.
Bank holidays and bans on withdrawals would help only temporarily.
To prevent a collapse of the banking system, Europe’s leaders would have to guarantee all deposits in euro-area banks, a move that would put Germany and other core countries on the hook for insuring more than 3 trillion euros in Italian and Spanish deposits.
Common deposit insurance would also require euro-area governments to achieve in a matter of days a harmonization of banking regulation that has escaped them for more than a decade.
Full text here
"most economically and politically destructive event of a generation"
Det var ett mycket allvarligt misstag att förespråka en svensk anslutning till EMU.
Alla som var för EMU i folkomröstningen har förbrukat sitt förtroende och bör avgå
Rolf Englund 13 april 2012
Bloomberg Opinon, Editors, May 16, 2012 1:00 AM GMT+0200
Unfortunately, Europe has reached the point where it must prepare for such an outcome.
First, Europe would have to absorb immediate losses on money lent to Greece. The country has about 400 billion euros in external debts, which its government, banks and companies would probably pay only in part or in drachmas.
Second, European officials would need a plan to stop bank runs.
As soon as Italian, Portuguese, Spanish and maybe even French depositors see footage of Greeks clamoring for their savings, they’ll want to get their euros out of local banks as quickly as possible.
Bank holidays and bans on withdrawals would help only temporarily.
To prevent a collapse of the banking system, Europe’s leaders would have to guarantee all deposits in euro-area banks, a move that would put Germany and other core countries on the hook for insuring more than 3 trillion euros in Italian and Spanish deposits.
Common deposit insurance would also require euro-area governments to achieve in a matter of days a harmonization of banking regulation that has escaped them for more than a decade.
Full text here
"most economically and politically destructive event of a generation"
Det var ett mycket allvarligt misstag att förespråka en svensk anslutning till EMU.
Alla som var för EMU i folkomröstningen har förbrukat sitt förtroende och bör avgå
Rolf Englund 13 april 2012
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