If Germany were to leave the euro?
Can Germany escape from the €?
Nothing is impossible. But there are major difficulties of legal, technical and economic nature. It is hardly enlightened public. In a more realistic assessment of a Euro-Germany's withdrawal is hardly responsible.
I. What are the legal difficulties?
Legally, a first outlet € is currently possible for any country. European treaties see a Euro exit simply not available. PERS is currently the only legal way for the abolition of the euro, the withdrawal from the European Union.
Now you can change contracts second course. But an amendment must be ratified by all Member States of the European Union in a lengthy process. If, for example, Malta, Greece refuses or concerns, you can not leave Germany to € legal.
A third possibility is the third open breach of contract. (It's not the first time that European treaties are violated.) If Germany unilaterally breaking the law leaves the euro, no one can prevent it. But an illegal exit from the euro would probably mean that Germany would lose his balance resulting from the target claims against the ECB. That alone would be the present state, a loss of 500 billion €.
4th In addition, an exit by breaking the law would be so blatant and so central that it probably is not just the euro, but the entire European treaty would be dead. Other countries may also feel entitled to break contracts at will. That would be the end of the EU.
II What are the technical difficulties?
Be exchanged at a € € must exit in DM. This is something completely different than DM to trade in euros. Not only do German €. You must prevent the citizens of the other euro countries also share in € DM. And that's what they are trying, as the DM would appreciate against the remaining € to probably 30% -50%. A timely exchange in DM is worth to citizens of other states, therefore, hard cash - with huge profit margins.
Can not make an exchange in DM depends on a residence in Germany?
You can - and should. But it probably will not benefit much. Foreign citizens need only a straw man in Germany found that will do the conversion for them. Because of the high profit margins, there will be plenty of it.
Is it possible to prevent an improper exchange of capital controls?
Capital controls to restrict cross-border payments. That's a big problem, especially for companies that export and import a lot. Long you can not be maintained. And it is at best a partial solution, because they prevent the influx of cash can hardly.
What problem is the exchange of cash?
Allow for the exchange of cash you have for a long period. After all, old and sick people must be able to exchange their cash. But this period can also be used to make foreign citizens. Pick up all the money from their savings and checking accounts and smuggled it into Germany. There, it exchanges a straw man.
If there is a bank failure in the other euro countries?
Most likely. If in the other euro countries to a large extent cash is withdrawn in order to bring it to Germany, the collapse of foreign banks. Is so much cash it does not, as is to the accounts of citizens. The banks could meet their payment obligations and would be broke.
It hurts Germany, where foreign citizens to exchange their euros and in DM?
Without a doubt. Then there is far too large DM-money crowd. This leads either to inflation or the central bank has to contend with very high interest rates, however. Both have disastrous macroeconomic consequences. The slightly too generous exchange of East German marks in DM was much less important in terms of volume. But even then, the Bundesbank had to carry a high interest rate policy that brought us the worst so far in 1993 Rezssion.
Can not make the exchange in DM unattractive by a poor exchange rate is offered?
Yes, you can change them, so you get a lot for very little € DM. But this is obviously bad for German. It is politically inconceivable that you get now for a € DM less than we got in 2002 in the reverse direction.
III. What are the economic difficulties in returning to DM?
Germany has foreign assets worth about 5,000 billion €. These include the target of the federal bank loans amounting to € 500 billion, but also claims of German companies, banks, insurance companies and private individuals. These demands are mostly in euros. When Germany introduced the DM and it appreciated against the euro by 30%, for example, the German demands in fact considered by 30%. This is an economic loss of 1,500 billion euros!
Are not the profits of foreign debt to?
That's right, our debts are devalued accordingly. But first, Germany is a net creditor (with around 700 billion euros), and second is the use is of German creditors of little use if they know that their heavy losses faced by the substantial gains of others who have gone into debt. Many people and many companies will have a lose much of their wealth. This can also meet the little man, whose company goes bankrupt or whose pensions had assets invested abroad.
What other economic costs, it?
The other major effect is the enhancement of new DM compared with the remaining €. The German competitiveness deteriorated considerably since German goods suddenly become more expensive. Some companies are able to cope with this, because currently they are doing very well because they take place under the Euro can not upgrade. But overall, it will certainly affect negatively on our economy and many companies will collapse also.
If the debt crisis be solved if we get out of the €?
No, of course, just as the southern countries remain in debt than before. And the banks still hold the rotten government bonds. The whole debt problem has very little to do with the euro.
Are there any advantages of a Euro-exit?
With its own currency, we would have less regard for structural weaknesses of other countries are taking because they could devalue. Although the devaluation hurts us, but the calls for a fiscal union would certainly be quieter. Germany could also operate flexible monetary policy again as soon as it requires the macro-economic situation in Germany. But if this is important to us, we had the euro not even allowed to import. The trouble today is that the withdrawal would entail enormous costs.
Can Germany escape from the €?
Nothing is impossible. But there are major difficulties of legal, technical and economic nature. It is hardly enlightened public. In a more realistic assessment of a Euro-Germany's withdrawal is hardly responsible.
I. What are the legal difficulties?
Legally, a first outlet € is currently possible for any country. European treaties see a Euro exit simply not available. PERS is currently the only legal way for the abolition of the euro, the withdrawal from the European Union.
Now you can change contracts second course. But an amendment must be ratified by all Member States of the European Union in a lengthy process. If, for example, Malta, Greece refuses or concerns, you can not leave Germany to € legal.
A third possibility is the third open breach of contract. (It's not the first time that European treaties are violated.) If Germany unilaterally breaking the law leaves the euro, no one can prevent it. But an illegal exit from the euro would probably mean that Germany would lose his balance resulting from the target claims against the ECB. That alone would be the present state, a loss of 500 billion €.
4th In addition, an exit by breaking the law would be so blatant and so central that it probably is not just the euro, but the entire European treaty would be dead. Other countries may also feel entitled to break contracts at will. That would be the end of the EU.
II What are the technical difficulties?
Be exchanged at a € € must exit in DM. This is something completely different than DM to trade in euros. Not only do German €. You must prevent the citizens of the other euro countries also share in € DM. And that's what they are trying, as the DM would appreciate against the remaining € to probably 30% -50%. A timely exchange in DM is worth to citizens of other states, therefore, hard cash - with huge profit margins.
Can not make an exchange in DM depends on a residence in Germany?
You can - and should. But it probably will not benefit much. Foreign citizens need only a straw man in Germany found that will do the conversion for them. Because of the high profit margins, there will be plenty of it.
Is it possible to prevent an improper exchange of capital controls?
Capital controls to restrict cross-border payments. That's a big problem, especially for companies that export and import a lot. Long you can not be maintained. And it is at best a partial solution, because they prevent the influx of cash can hardly.
What problem is the exchange of cash?
Allow for the exchange of cash you have for a long period. After all, old and sick people must be able to exchange their cash. But this period can also be used to make foreign citizens. Pick up all the money from their savings and checking accounts and smuggled it into Germany. There, it exchanges a straw man.
If there is a bank failure in the other euro countries?
Most likely. If in the other euro countries to a large extent cash is withdrawn in order to bring it to Germany, the collapse of foreign banks. Is so much cash it does not, as is to the accounts of citizens. The banks could meet their payment obligations and would be broke.
It hurts Germany, where foreign citizens to exchange their euros and in DM?
Without a doubt. Then there is far too large DM-money crowd. This leads either to inflation or the central bank has to contend with very high interest rates, however. Both have disastrous macroeconomic consequences. The slightly too generous exchange of East German marks in DM was much less important in terms of volume. But even then, the Bundesbank had to carry a high interest rate policy that brought us the worst so far in 1993 Rezssion.
Can not make the exchange in DM unattractive by a poor exchange rate is offered?
Yes, you can change them, so you get a lot for very little € DM. But this is obviously bad for German. It is politically inconceivable that you get now for a € DM less than we got in 2002 in the reverse direction.
III. What are the economic difficulties in returning to DM?
Germany has foreign assets worth about 5,000 billion €. These include the target of the federal bank loans amounting to € 500 billion, but also claims of German companies, banks, insurance companies and private individuals. These demands are mostly in euros. When Germany introduced the DM and it appreciated against the euro by 30%, for example, the German demands in fact considered by 30%. This is an economic loss of 1,500 billion euros!
Are not the profits of foreign debt to?
That's right, our debts are devalued accordingly. But first, Germany is a net creditor (with around 700 billion euros), and second is the use is of German creditors of little use if they know that their heavy losses faced by the substantial gains of others who have gone into debt. Many people and many companies will have a lose much of their wealth. This can also meet the little man, whose company goes bankrupt or whose pensions had assets invested abroad.
What other economic costs, it?
The other major effect is the enhancement of new DM compared with the remaining €. The German competitiveness deteriorated considerably since German goods suddenly become more expensive. Some companies are able to cope with this, because currently they are doing very well because they take place under the Euro can not upgrade. But overall, it will certainly affect negatively on our economy and many companies will collapse also.
If the debt crisis be solved if we get out of the €?
No, of course, just as the southern countries remain in debt than before. And the banks still hold the rotten government bonds. The whole debt problem has very little to do with the euro.
Are there any advantages of a Euro-exit?
With its own currency, we would have less regard for structural weaknesses of other countries are taking because they could devalue. Although the devaluation hurts us, but the calls for a fiscal union would certainly be quieter. Germany could also operate flexible monetary policy again as soon as it requires the macro-economic situation in Germany. But if this is important to us, we had the euro not even allowed to import. The trouble today is that the withdrawal would entail enormous costs.