Wednesday, 18 February 2009

Scrapping the Euro - hold on a moment

A comment was made at another blog site about the difficulties facing the Eurozone and makes the point

Another alternative thinking in the wake of this crisis would be to re-assess the long term workability of the Euro as a single currency for the EuroZone.....
The European Common Market is a great thing, the Euro is not so much of a success, lets face it! Different economies will always have different monetary and fiscal behaviours, making it impossible to come all under one regulating body

I think we should be careful not to be too cavalier about such matters.
It would be extraordinarily disruptive for the global financial system - not that it has been having a quiet time recently anyway - if the Euro currency was to unravel. This could see a capital flight like nothing we have seen yet. While the US dollar would be the initial beneficiary the longer term "unintended consequences" of current members of the monetary union going their own way would really see a flight to gold and other hard assets.

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