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.
‘WIN-WIN’: The Philippines, and central and eastern European countries are important potential drone cooperation partners, Minister of Foreign Affairs Lin Chia-lung said Minister of Foreign Affairs Lin Chia-lung (林佳龍) in an interview published yesterday confirmed that there are joint ventures between Taiwan and Poland in the drone industry. Lin made the remark in an exclusive interview with the Chinese-language Liberty Times (the Taipei Times’ sister paper). The government-backed Taiwan Excellence Drone International Business Opportunities Alliance and the Polish Chamber of Unmanned Systems on Wednesday last week signed a memorandum of understanding in Poland to develop a “non-China” supply chain for drones and work together on key technologies. Asked if Taiwan prioritized Poland among central and eastern European countries in drone collaboration, Lin
The Chien Feng IV (勁蜂, Mighty Hornet) loitering munition is on track to enter flight tests next month in connection with potential adoption by Taiwanese and US armed forces, a government source said yesterday. The kamikaze drone, which boasts a range of 1,000km, debuted at the Taipei Aerospace and Defense Technology Exhibition in September, the official said on condition of anonymity. The Chungshan Institute of Science and Technology and US-based Kratos Defense jointly developed the platform by leveraging the engine and airframe of the latter’s MQM-178 Firejet target drone, they said. The uncrewed aerial vehicle is designed to utilize an artificial intelligence computer
Renewed border fighting between Thailand and Cambodia showed no signs of abating yesterday, leaving hundreds of thousands of displaced people in both countries living in strained conditions as more flooded into temporary shelters. Reporters on the Thai side of the border heard sounds of outgoing, indirect fire yesterday. About 400,000 people have been evacuated from affected areas in Thailand and about 700 schools closed while fighting was ongoing in four border provinces, said Thai Rear Admiral Surasant Kongsiri, a spokesman for the military. Cambodia evacuated more than 127,000 villagers and closed hundreds of schools, the Thai Ministry of Defense said. Thailand’s military announced that
CABINET APPROVAL: People seeking assisted reproduction must be assessed to determine whether they would be adequate parents, the planned changes say Proposed amendments to the Assisted Reproduction Act (人工生殖法) advanced yesterday by the Executive Yuan would grant married lesbian couples and single women access to legal assisted reproductive services. The proposed revisions are “based on the fundamental principle of respecting women’s reproductive autonomy,” Cabinet spokesperson Michelle Lee (李慧芝) quoted Vice Premier Cheng Li-chiun (鄭麗君), who presided over a Cabinet meeting earlier yesterday, as saying at the briefing. The draft amendment would be submitted to the legislature for review. The Ministry of Health and Welfare, which proposed the amendments, said that experts on children’s rights, gender equality, law and medicine attended cross-disciplinary meetings, adding that
RSS