Leaving the eurozone
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- Category: Business
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22 Feb 2012
What would happen were the eurozone to break up?
AS the European sovereign debt crisis continues, some economists have begun to seriously consider the end of the euro as it currently exists. But how could the end of the common European currency come?
Most officials are loath to even discuss the idea. The euro, as most modern currencies, derives its value from being officially declared legal tender and the public accepting it as such. People must trust that the currency has value. If they lose faith in it, the currency could collapse regardless of official action.
When contacted regarding what could happen during a eurozone breakup, Veli-Matti Mattila, chief economist for the Federation of Finnish Financial Services, refused to speculate. He did say that “in general we support the measures taken by the EU to solve the crisis.”
Most speculation has revolved around Greece leaving the eurozone. The theory is that a reintroduction of a devalued drachma could make the economy more competitive. But there have also been calls for strong countries to withdraw from the common currency.
“I think the possibility that Finland would withdraw from the eurozone should be considered,” former presidential candidate Paavo Väyrynen told Yle. “We could bring the markka back in parallel with the euro. This would be sensible and it would be possible, if desired.”
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DAVID J. CORD
HELSINKI TIMES
LEHTIKUVA - JUSSI NUKARI
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