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One question, if one member-state were to retire from the euro, how legitimate would be the claim that euro-denominated debts are in its own currency, and that a change first of name, then of value, would not imply a revaluation of the foreign debt in euros?

res humą m'és alič
by Antoni Jaume on Fri Jul 20th, 2012 at 04:07:30 PM EST
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Most Euro debt is under national law, except for bailout money which I think is either under London or Luxembourg law.

However, both leaving the Euro and introducing different legal tender from the Euro would break a number of EU laws.

If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa

by Migeru (migeru at eurotrib dot com) on Fri Jul 20th, 2012 at 04:12:34 PM EST
[ Parent ]
Yes, the present situation was supposed to never happen. Still exit has been trotted for Greece.

res humą m'és alič
by Antoni Jaume on Fri Jul 20th, 2012 at 04:20:12 PM EST
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The ECB is trying to make Greece's life impossible as we speak: ECB turns screws on Greece, stops accepting collateral
The ECB move, which analysts said was aimed at stepping up pressure on Athens to adhere to the commitments of its EU/IMF bailout, will force Greek banks to turn to their national central bank for Emergency Liquidity Assistance (ELA) funds. Those funds will be more expensive than funds available in the ECB's regular liquidity operations.

The ECB said the collateral exclusion was due to the expiration of a temporary 35 billion euro scheme agreed with Greece and euro zone leaders whereby the ECB would continue to accept Greek bonds after they went into default this year.

...

European and IMF officials are due to visit Athens next week to decide whether Athens merits another tranche of aid from its latest bailout package and analysts said the ECB move was designed to step up pressure on Greece ahead of the visit.



If you are not convinced, try it on someone who has not been entirely debauched by economics. — Piero Sraffa
by Migeru (migeru at eurotrib dot com) on Fri Jul 20th, 2012 at 04:23:08 PM EST
[ Parent ]
One question, if one member-state were to retire from the euro, how legitimate would be the claim that euro-denominated debts are in its own currency, and that a change first of name, then of value, would not imply a revaluation of the foreign debt in euros?

On principle, you can make a strong case for either view. In practice, the police force and court system which enforce a debt decide which currency it is denominated it. The creditor decides whether he views this as a default, but creditor memory of default times out after about a year and a half.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 23rd, 2012 at 03:18:11 AM EST
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