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Breaking up of the Euro contingency projects

Much to my surprise I found out recently that a large number of UK Banks have already been working on their plans for the eventual breakup of the Euro. As I understand it the banks are basing their plans around first one Euro State going, quickly followed by others, with various scenarios being played out. For example, a split, with the northern European States retaining the Euro and the Southern States going whatever way they see fit. A complete demise of the Euro has also featured as a likely end game but is not being considered as a first step.

 

Death of the Euro’ projects have been instigated; include coping with investor and customer panic, and building a first response capability to try and maintain confidence. System changes replacing the Euro with a default currency have been discussed, but I understand that no consensus has yet been achieved. However, with the potential of a fast collapse and contagion, plans include a quick switchover.

 

Some banks have been already quietly been downsizing their Euro exposure or are at the very least managing it closely. It is obviously a very sensitive issue of which all the banks involved are fully aware.

 

Although unlikely to be confirmed publically, it is my understanding that these projects have been commenced with the full awareness of the FSA, The Bank of England and the Government.  All parties concerned having accepted the necessity, as a major contingency, for the protection of investors, as well as financial institutions and a responsible process for the Banks to have undertaken.

 

It is not known if similar ‘death of the Euro’ projects are underway across Europe but one would hope so. With countries likely to move out of the Euro under a continuing watching brief, UK Banks are not willing to risk their business to political rhetoric and some as yet unforeseen agreement. For the first time, the horrors of the demise of the Euro feature within the advanced plans of UK Banks. Other financial organisations should take heed and be planning also!

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Comments: (7)

A Finextra member
A Finextra member 26 January, 2012, 13:19Be the first to give this comment the thumbs up 0 likes

Right - I guess it would be blind incompetence if they weren't planning for this option.  Hang on minute... does that mean lessons actually learned from the past?

A Finextra member
A Finextra member 26 January, 2012, 13:38Be the first to give this comment the thumbs up 0 likes

Could be mate , could be Thanks for the comment

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 30 January, 2012, 07:36Be the first to give this comment the thumbs up 0 likes

Breaking up the euro is not possible - without a total breakdown of the economy. More or less contingency is then to spit into a fire.

 

A Finextra member
A Finextra member 30 January, 2012, 08:07Be the first to give this comment the thumbs up 0 likes

A total breakdown of the economy is what we are looking at Bo. While Europe burns the plliticians are fiddling and i am afraid their inert ability to agree a plan will cause countries to depart leaving a split between the richer and the poorer. So breaking up plans by banks looks to be a prudent measure. Its when you hear the detail of the plans that the horror of what is in front of us becomes more frightening

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 30 January, 2012, 08:10Be the first to give this comment the thumbs up 0 likes

Not only is the breakup impossible - without a global economy catastrophy - it would also be a disaster to have to use scarce IT-resources for something that do not deliver new value in banking - on the contrary destroys it.

 

A Finextra member
A Finextra member 30 January, 2012, 09:36Be the first to give this comment the thumbs up 0 likes

Bo you cant take it that the banks see the break up as real possibility and the disaster you mention is real in these scenarios costs of IT are not a consideration. There are far bigger concerns. Banking value is not the issue when survival is the main focus

Bo Harald
Bo Harald - Transmeri, Demos, Real Time Economy Program,MyData - Helsinki Region 30 January, 2012, 10:51Be the first to give this comment the thumbs up 0 likes

Yes - so let us use bank resources on something that is real and creates value in new dimensions - for example extended payments (a 250bn productivity improvement for enterprises in Europe)

Gary Wright

Gary Wright

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