ABSTRACT
This chapter discusses the main risks related to departure from the common currency, and explains how the strategy the book proposes eliminates or limits those risks and allows confidence building during the process of segmenting the eurozone.
The chapter explains specific safeguards to eliminate or contain particular risks:
The risk of expulsion from the EU and the introduction of trade barriers.
The risk of a banking panic and capital flight.
The balance-sheet effect.
The risk of excessive appreciation of Germany’s new currency.
The problem of crisis-stricken countries’ excessive debt and bad loans.
The risk of macroeconomic instability in less competitive countries, and currency wars.
