A Primer on the Euro Breakup. Posted in European Economy, Featured on February 16, 2012Topicsbreakupcurrencydebtdefaulteuroeurope In this piece we look at the mechanics of a currency breakup and how it would happen.
This piece is longer than most of our pieces and is a slightly more wonkish piece than usual, but the first two pages provide a summary of the entire piece. We look at previous currency breakups, how they happened, and what the consequences are and what the likely outcome is economically for any periphery country that exits the euro. Click to download the report in full. To see our full product offering please contact us to discuss a trial of our research. Euro Area Is Coming to an End: Peter Boone and Simon Johnson. Investors sent Europe’s politicians a painful message last week when Germany had a seriously disappointing government bond auction.
It was unable to sell more than a third of the benchmark 10-year bonds it had sought to auction off on Nov. 23, and interest rates on 30-year German debt rose from 2.61 percent to 2.83 percent. The message? Germany is no longer a safe haven. Since the global financial crisis of 2008, investors have focused on credit risk and rewarded Germany with low interest rates for its perceived frugality. Central Banks Plan for Possible Euro Breakup as Merkel Focuses on Wrong Issues. The denial about the existential nature of the Eurozone crisis seems to be lifting.
The press has featured reports of companies and banks doing contingency planning for the possibility of a Euro dissolution or exits by some member states. In keeping, the Wall Street Journal tonight reports that even central banks are starting to contemplate what had heretofore been unthinkable: Leaving the euro: A practical guide - roger bootle.pdf.