Financial Times
January 26, 2012
Last summer, some of America’s largest banks secretly stocked their cash machines with the maximum possible supply of notes. The reason? In July 2011, the bankers feared that the US might be about to suffer a technical default, because Congress could not agree on measures to raise the debt ceiling.
So, they decided – after collective discussions – to keep those ATMs stuffed with greenbacks to ensure that consumers would never panic about running out of cash if that “worst-case” default scenario transpired. It is a sobering – and illuminating – point to ponder, amid the tortuous dramas now surrounding the future of the eurozone. In public no senior European or American banker currently wants to admit they are preparing for another “worst-case” scenario, namely the break-up of the eurozone, or exit of one member (such as Greece).
After all, at this week’s meeting of the World Economic Forum in Davos, eurozone leaders have stressed their profound commitment to keeping the single currency intact. And the consensus among the senior bankers I have spoken to this week is that the most likely scenario for the eurozone for the foreseeable future – say, with a 70 per cent probability – is continued “muddle through”; the ECB’s liquidity moves have staved off fears of an imminent crisis.
Nevertheless, almost nobody seems to expect a truly positive “solution” soon, and most think that a break-up or exit scenario remains entirely possible (say, with a 20-25 per cent probability). Thus, even amid their soothing public rhetoric, most large banks are now secretly preparing contingency plans – just in case.
More
No comments:
Post a Comment