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Leaving the €, what happens to deposits

  • 12-09-2011 12:36pm
    #1
    ch750536
    Registered Users, Registered Users 2 Posts: 3,736 ✭✭✭


    Was told this the other day can anyone clarify how much of it is bull?

    Lets imagine I have €10,000 in the bank, technically this is €10,000 Irish Euro.
    Next week it is decided Ireland is leaving the Euro and moving to the Irish$.
    At the point of transferral, the Irish govt can declare €Irish 1 = $Irish 1
    Since all €'s are country linked, germany can declare €Irish 1 = €German 0.3

    Indication was that if it looks like we will leave the € then place your deposits in german banks before it happens, though that did smell a bit wiffy.


Comments

  • #2
    carveone
    Registered Users, Registered Users 2 Posts: 1,306 ✭✭✭carveone


    ch750536 wrote: »
    Indication was that if it looks like we will leave the € then place your deposits in german banks before it happens, though that did smell a bit wiffy.

    Well, whatever happens, Greece will be first so we can watch and see.


  • #3
    Mr_Roger_Bongos
    Registered Users, Registered Users 2 Posts: 1,470 ✭✭✭Mr_Roger_Bongos


    There's some logic in the 'wait and see' approach but things could develop very quickly.

    If you've got big euro deposit's, spread it around!


  • #4
    carveone
    Registered Users, Registered Users 2 Posts: 1,306 ✭✭✭carveone


    The speed things can happen is a good point. Yes, spread it around. Bear in mind that those on the wrong side of the CHF (Swiss frank) Forex got absolutely smoked last week.

    When noone knows what could happen, being cautious, cashy and hedged to f... is a good plan. Having said that, it can be good to buy equities while they're still smouldering. Barclays is a tad oversold but that's just my opinion. XLF would be safer. Or the Dax at 5000. Either that's a really good buy or the world is ending!

    Or sell the puts - at least get paid for not owning them :rolleyes:

    Who knows?


  • #5
    coylemj
    Registered Users, Registered Users 2 Posts: 25,624 ✭✭✭✭coylemj


    ch750536 wrote: »
    Was told this the other day can anyone clarify how much of it is bull?

    Lets imagine I have €10,000 in the bank, technically this is €10,000 Irish Euro.
    Next week it is decided Ireland is leaving the Euro and moving to the Irish$.
    At the point of transferral, the Irish govt can declare €Irish 1 = $Irish 1
    Since all €'s are country linked, germany can declare €Irish 1 = €German 0.3

    Indication was that if it looks like we will leave the € then place your deposits in german banks before it happens, though that did smell a bit wiffy.

    All of it is bull, there is no such things as an 'Irish' euro and a 'German' euro. It's possible to tell which country issued a note from the serial number but once in circulation the notes are of equal value regardless of which country issued them.

    If we left the euro we would establish a new currency and it would be immediately devalued against the euro so the local cost of imports for things like fuel would rise significantly while the winners would be exporters because they would be able to reduce their prices against competitors, precisely what the Chinese have been doing for years by keeping their currency artificially low against world currencies.


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