Comments on: What would happen if the euro (european currency) collapsed in terms of global economic stability?

By: anderson

anderson — Tue, 30 Nov 1999 00:00:00 +0000

Good days are gone but worse day yet to come, its a Red signal for all EURO zone countries. Started from Greece debt, now is a time for Spain and poland.. and so on…
Collapse of Euro means again once more Global recession.. more unstable political situation, more unemployment etc.
EU should rise up needed solidarity to save the EURO currency.

By: SDD

SDD — Tue, 30 Nov 1999 00:00:00 +0000

Well, at some point, your backup plan is simply to default on sovereign debt– which is what Greece would (and should) be doing if it were not part of the EU. One way of doing that is to debase the Euro to the point where it can pay those obligations with paper that is worthless — or at least worth less.

By: Amnesiac

Amnesiac — Tue, 30 Nov 1999 00:00:00 +0000

I would be very surprised if individual central banks in the Eurozone didn’t have back-up plans for the eventuality of a Euro collapse. They wouldn’t broadcast it as it would only further fuel market specualtion of a collapse, but these situations can change very quickly, so they have to have a plan.

By: ClaytonJ

ClaytonJ — Tue, 30 Nov 1999 00:00:00 +0000

Remember the Euro is the currency designed to establish parity with the US Dollar. Conceptually it is a perfect plan. A uniform value medium for commerce and trade.

The difference being the US is a federation of states under one US Constitution. The European nations are sovereign nations with varying political economic agendas.

Return to individual national currency is a distinct possibility.

By: moravianhawk

moravianhawk — Tue, 30 Nov 1999 00:00:00 +0000

If Euro currency collapses, it will NOT solve European problem to any country. Even if each country of Eurozone returns to own currency, the problems like debt will remain. On top of it, it would be economically very expensive, since it will also lead to collapse of the bilateral trade among Euroblock. The drop of international trade would hit hard especially Germany that is depended on the export and its large conglomerates will get hit particularly hard and its banks lend money to many other countries outside of Eurozone. It would be hard to collect these money on default currency back. It is estimated that Eastern Europe and Russia alone owns 1Trillion Euro debt that is predominately held by the wealthiest countries of EU.
If Eurozone collapses, so it will its common projects that were funded by common currency. The defense project, Airbus, the Space program, the pharmaceutical and science research will all disappear and with it entire industries. Plus the large agricultural sector that benefits France and Italy will be stuck with overproduction. So I strongly believe that collapse of the Euro would and will lead to collapse of EU as whole and with it entire idea of integration of the Continent. Since EU is the largest economic block in there world, its collapse will bring the rest of the world into recession and countries that depend on investment from EU (Eastern Europe, Africa, South America) will suffer.
While I believe that Germans and French do have backup plan, the exit will not help to overcome problems in rich EU countries. It will also end ambition for Germans to become financial center of Europe as they hoped to take it from London.