Traders and dealers in London's financial markets have found a new subject for speculation: Is the EU's eurozone going to collapse after the "no" votes in referendums in France and the Netherlands on the European constitution?
The City has always been sceptical about the project that has led 12 EU members to adopt a common currency but until now few have imagined that it could collapse, with EU states reverting to marks, francs, pesetas, drachmas and other former currencies.
It is a "highly political" issue, according to one economist with an investment bank who did not want his name associated with discussion of the issue.
"It is not something I see as a plausible outcome, nevertheless it is something that's clearly affecting market sentiment and capital markets," he said.
Economists' imaginations have been stirred by the two "no" votes last week and by statements about the possible collapse, temporary or otherwise, of monetary union.
Many London traders doubted whether the euro would ever see the light of day and now they lend a ready ear to rumors of its impending death.
Julien Seetharamdoo, economist at Capital Economics, said speculation about an implosion of monetary union would intensify as the implications of the French and Dutch rejection of the European constitution are considered.
Deeming the break-up of monetary union unlikely, he said that that did not stop London foreign exchange dealers and economists from talking about it.
"But because the idea has a superficial attractiveness, there is a danger that it could be mooted as a real possibility in some countries," he said.
In the view of Stuart Thomson, economist with Charles Stanley, the idea is a little more than an outside chance.
Not only could some countries want to pull out of the eurozone by 2008, but without political union the euro's demise is "inevitable" by 2020, he says.
He thinks the key lies in Asia, where a kind of monetary union exists because central banks intervene to maintain fixed exchange rates. A chain reaction there, he says, could create an unmanageable economic situation in Europe.
If and when the Chinese yuan breaks its link with the US dollar and Asian monetary cohesion breaks down, the US dollar will weaken, he argues.
The euro will appreciate by between 20 percent and 30 percent against the US dollar. EU countries, particularly "Italy, Greece and Portugal, which traditionally used devaluation as a safety valve," will "be unable to cope" and will be tempted to leave the eurozone, he said.
LEVERAGE: China did not ‘need to fire a shot’ to deny Taiwan airspace over Africa when it owns ‘half the continent’s debt,’ a US official said, calling it economic warfare The EU has raised concerns about overflight rights following the delay of President William Lai’s (賴清德) planned state visit to the Kingdom of Eswatini after three African nations denied overflight clearance for his charter at the last minute. Taiwanese allies Paraguay and Saint Kitts and Nevis, as well as several US lawmakers and the Inter-Parliamentary Alliance on China (IPAC) condemned China for allegedly pressuring the countries. Lai was scheduled to fly directly to Taiwan’s only African ally from yesterday to Sunday to celebrate the 40th anniversary of King Mswati III’s accession and his 58th birthday, but Seychelles, Mauritius and Madagascar suddenly revoked
PROVOCATIVE: Chinese Deputy Ambassador to the UN Sun Lei accused Japan of sending military vessels to deliberately provoke tensions in the Taiwan Strait China denounced remarks by Japan and the EU about the South China Sea at a UN Security Council meeting on Monday, and accused Tokyo of provocative behavior in the Taiwan Strait and planning military expansion. Ayano Kunimitsu, a Japanese vice foreign minister, told the Council meeting on maritime security that Tokyo was seriously concerned about the situation in the East China and South China seas, and reiterated Japan’s opposition to any attempt to change the “status quo” by force, and obstruction of freedom of navigation and overflight. Stavros Lambrinidis, head of the EU delegation to the UN, also highlighted South China Sea
The final batch of 28 M1A2T Abrams tanks purchased from the US arrived at Taipei Port last night and were transported to the Armor Training Command in Hsinchu County’s Hukou Township (湖口), completing the military’s multi-year procurement of 108 of the tanks. Starting at 12:10am today, reporters observed more than a dozen civilian flatbed trailers departing from Taipei Port, each carrying an M1A2T tank covered with black waterproof tarps. Escorted by military vehicles, the convoy traveled via the West Coast Expressway to the Armor Training Command, with police implementing traffic control. The army operates about 1,000 tanks, including CM-11 Brave Tiger
China on Wednesday teased in a video an aircraft carrier that could be its fourth, and the first using nuclear power, while making an allusion to Taiwan and vowing to further build up its islands, as it looks to boost maritime power, secure resources and bolster territorial claims. The video, issued on the eve of the 77th founding anniversary of the Chinese People’s Liberation Army Navy, featured fictional officers with names that are homophones of three commissioned aircraft carriers, the Liaoning (遼寧), Shandong (山東) and Fujian (福建). Titled Into the Deep, it showed a 19-year-old named “Hejian” (何劍) joining the group, sparking
RSS