Subject category:
Finance, Accounting and Control
Published by:
Centre for Islamic Banking and Finance
Length: 7 pages
Data source: Generalised experience
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Abstract
The world''s banking system has been thrown into total disarray by the announcement that the French government was withdrawing from the euro and replacing it with a devalued New Franc. The euro was first brought in at the beginning of 1999 with great fanfare. The financial markets were faced at that moment with a new risk, a risk with which they had no prior experience. This risk, known as legacy risk exposure, almost completely ignored by financial commentators at the time, was the possibility and consequent implications, of the withdrawal of a Member State from the fixed euro parity. This case, which is by necessity forward looking, examines the possibility and potential implications, of collapse of the greatest monetary experiment in history, namely the introduction of the euro.
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Abstract
The world''s banking system has been thrown into total disarray by the announcement that the French government was withdrawing from the euro and replacing it with a devalued New Franc. The euro was first brought in at the beginning of 1999 with great fanfare. The financial markets were faced at that moment with a new risk, a risk with which they had no prior experience. This risk, known as legacy risk exposure, almost completely ignored by financial commentators at the time, was the possibility and consequent implications, of the withdrawal of a Member State from the fixed euro parity. This case, which is by necessity forward looking, examines the possibility and potential implications, of collapse of the greatest monetary experiment in history, namely the introduction of the euro.