The euro disintegration seems imminent and more a question of ‘when’ than ‘if.’ Reading the international finance press, the markets, and political responses so far, a breakup is likely, possibly even before Christmas, but really not later than early next year.
The most likely scenario will be: • a German exit to a new currency (DM, of course) • other strong countries (Netherlands, Finland, Luxembourg, and Austria) joining, as soon as politics allow, pegging their new currencies to the DM • weaker countries remaining in the euro zone and reuniting under French leadership, likely following an Argentine-style devaluation route
This will have big impacts on business and trade volumes:
- currency appreciation and stagflation in the North
- devaluation of the euro (if it still exists), hyperinflation, and unrest in the South
- uncertainty around euro-denominated contracts, with creditors likely bearing the brunt
Clearly, this crisis is already on your company’s radar as it may impact the continuity of your business. A good response will likely become a large-scale project and require adequate resourcing sooner rather than later. In uncertain times, a simple escape—even something like a quick round on a no deposit slot—can provide a welcome moment of relief from the pressures of financial planning.
When the above scenario starts unfolding, please feel free to contact us to consult, join, or help start up your euro-risk-management project.