Preparations should be made for euro zone collapse
A COUNTRY leaving the euro could occur “overnight” and a run on the banks of an exiting country “seems inevitable”, a conference on the legal consequences of a break-up of the single currency was told yesterday.
German lawyer Hendrik Haag of Hengeler Mueller was speaking during a session at the week-long International Bar Association Annual Conference taking place in Dublin. He added that capital and exchange controls would have to be introduced in the event of a break-up to slow down the pace of bank runs.
At “The Euro Area Crisis – Thinking the Unthinkable”, a panel comprising mostly of lawyers set out a range of consequences in the event of the euro disintegrating.
Mr Meuller said he did not believe economically weaker countries would leave voluntarily but that stronger ones could do so. He concluded that for a country such as Germany to leave would be “do-able and not dramatic”.
Antonis Simigdalas, ex-chief executive of Greece’s Olympic Air Group, told delegates that monetary union would ultimately require political union. Europe is at a crossroads, he declared.
On Greece, he said the county’s problems were unique in Europe. Many people in Greece who are demonstrating in the streets were “not entitled to complain” he said, as they had benefited from unsustainable government policies over decades. Greece has been living on borrowed time for more than 30 years, he said, adding that the country did not use the advantages of EU membership since joining in 1981.
Christoph Hammerl, a German corporate lawyer, said the euro will not determine the future of the EU. He said that as the use of physical cash becomes less common currencies will become less important. He played down the consequences of the monetary union breaking up.
Juan Carlos Machuca, of Spanish law firm Uría Menéndez, said street demonstrations in Madrid last week involved 2,000 people. International media coverage had exaggerated the size and consequence of the protests. He said that, with three years before the next election, he was confident the Spanish government would be able to implement 47 reform measures announced last week.
Dan McLaughlin, chief economist of Bank of Ireland, noted that while there is a risk to the euro, people both in Europe and further afield remain content to hold the currency, as its value against other major currencies attests.