What happens if Greece (or another country) leaves the Euro

CFA General
#1

Does anyone know? How will it impact the Euro?

#2

I think the impact will be minimal if only Greece left, however if PIIG all left there are chances that Eruo will strengthen. I think the whole mechanism of Euro is flawed, in that nations with drastically different GDP, political and economic interest should never be backed by one currency. I still have to applaud the EU for getting this far and from what is seems it is here to stay for long. The complexity increases when you do not have a local currency. How do you determine what is your allocation? UK was smart enough to avoid the trap.

#3

Would the ECB be able to support itself having to repay both capital paid and reserves pledged by these nations when they entered into the euro?

#4

Or perhaps Germany might leave (and join Britain?)

#5

bchadwick Wrote: ------------------------------------------------------- > Or perhaps Germany might leave (and join Britain?) That would shut the euro down in my opinion.

#6

While Greece could leave the Euro, I think we are a long way off that. For a start, there is no legal mechanism for a country to leave the eurozone. So it would be totally breaking new ground. The country’s sovereign euro-denominated debt would presumably get converted into this new currency which bondholders mightn’t be too happy about. Logistically it would be a nightmare and there is no political will either within Greece or in the rest of the Eurozone to go down that road. As for Germany joining a new currency area with Britain!! Come on. The USA and Canada forming a common currency zone is a far more likely but still extremely unlikely outcome.

#7

The bit about Germany joining Britain wasn’t about forming a common currency. It was referring to the fact that the British were initially going to be part of EEC but then pulled out. Anyway, I don’t think it’s very likely, but just remember that it isn’t just the weakest ones that might pull out…

#8

What would happen if hawii left the US?

#9

BChadwick. Sorry. I misinterpreted what you wrote. Yes Germany could exit the Eurozone. I personally think it is more likely that the UK will join the Euro than Germany leave it. In Britain, 2 of the 3 main political parties are at least somewhat favorably disposed to joining the euro. In Germany only very fringe elements would call for a return of the Mark.

#10

Carson Wrote: ------------------------------------------------------- > BChadwick. Sorry. I misinterpreted what you wrote. > > > Yes Germany could exit the Eurozone. I personally > think it is more likely that the UK will join the > Euro than Germany leave it. > > In Britain, 2 of the 3 main political parties are > at least somewhat favorably disposed to joining > the euro. In Germany only very fringe elements > would call for a return of the Mark. Given your point of view, which I think makes sense, is there anyway the euro doesn’t go lower?