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.
A signaling system malfunction disrupted high-speed rail (HSR) services beginning at 8am today, with trains temporarily reduced to three northbound and three southbound trains per hour as authorities conduct inspections. The malfunction occurred on a section of track in Miaoli County during pre-operation checks early this morning, forcing northbound and southbound trains to use a single track, the HSR operator said. The regular schedule has been replaced with three hourly trains offering only nonreserved seating in each direction, stopping at every station, it said, adding that business class cars would still have reserved seating. Departures from terminal stations are scheduled at the top
Taiwan is still in the process of assessing the possibility of recruiting workers from Eswatini, the Ministry of Foreign Affairs said yesterday, adding that its goal is to help Eswatini upgrade its vocational training centers. If there are plans to recruit workers from Eswatini, safeguarding national security, protecting public health and ensuring the employment rights of Taiwanese would be prerequisites, Department of West Asian and African Affairs Director-General Yen Chia-liang (顏嘉良) told a news conference. Key considerations would also include filling labor shortages in specific industries, and fostering bilateral professional and technical exchanges, he said. Yen was asked about the progress of labor
A US uncrewed surface vessel (USV) encountered multiple Chinese warships during an autonomous transit of the Taiwan Strait, US defense company Seasats said in a statement on Wednesday. Seasats announced that a Lightfish USV had completed the first autonomous transit of the Taiwan Strait. Over five days, the USV traversed the entire length of the Strait while constantly monitoring surface vessel traffic, the company said. The Lightfish encountered multiple Chinese warships, one of which was a Chinese People’s Liberation Army Navy (PLAN) Type 056 corvette, it said. The Chinese vessels were operating “well within Taiwan’s exclusive economic zone without transmitting their identity via the
VERBOSE VESSELS: A CGA cutter and a China Coast Guard exchanged verbal barbs for more than a day in Taiwanese-controlled waters before the Chinese vessel left The Taiwanese and Chinese coast guards had a standoff near the strategically located Pratas Islands (Dongsha Islands, 東沙群島) in the north of the South China Sea, the Coast Guard Administration (CGA) said yesterday. The two sides engaged in intense radio exchanges over sovereignty claims during the 33-hour standoff. China Coast Guard vessel 3501 eventually left the restricted waters, 26.6 nautical miles (49.2km) west of the Pratas Islands, at 5pm yesterday, the CGA said. Lying approximately between southern Taiwan and Hong Kong, the Taiwan-controlled Pratas are seen by some security experts as vulnerable to Chinese attack due to their distance — more than
RSS