Banks ready for break-up of eurozone
Published 28/05/2012 | 08:00
Policymakers and firms across Europe are making preparations to cope with a break-up of the single currency as the president of the Swiss central bank became the latest senior figure to admit to contingency plans for a "collapse" of the eurozone.
"We must be prepared just in case the currency union collapses, although I don't expect that to happen," said Swiss National Bank boss Thomas Jordan.
Mr Jordan added that his objective if it did come to the worst would be to prevent funds flooding into the safe haven of the Swiss franc, which could damage his country's export sector.
Switzerland has already taken an economic hit from appreciation of the Swiss franc over the past year.
Sterling has also appreciated considerably since the beginning of the year as market fears over the future of the single currency have increased.
The Bank of England governor, Sir Mervyn King, said this month that it too is busy preparing contingency plans to cope with a potential major economic shock to the UK economy emanating from the eurozone.
The European Commission also said last week that it has asked member states to make plans to deal with a potential Greek exit.
It is not just Eurozone officials who are making emergency preparations.
The chief executive of Lloyd's of London, Richard Ward, said in an interview that the insurance market is developing contingency plans. "I don't think that if Greece exited the euro it would lead to the collapse of the eurozone, but what we need to do is prepare for that eventuality," said Mr Ward.
Last week sources told the Reuters news agency that French banks - the most exposed of Europe's banks to Greece debt default - have stepped up their contingency planning for such an event. At the end of December 2011, total French cross-border lending to Greece was $44.4bn (£28.3bn), according to data from the Bank for International Settlements.
More political pressure in the single currency could materialise on Thursday when Ireland holds a referendum on the new fiscal compact.