In his NY Times blog, Professor Krugman suggests a twist on how this will play out for Italian and then French banks.
At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.The twist is that the deposit guarantee will not be honored with euros, but rather with new lira.
1 comment:
It seems like a long time ago that that people were predicting the Euro would supplant the US dollars as the global reserve currency.
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