Risk of eurozone division high, says StanChart CEO
LONDON THE head of Standard Chartered bank sees a growing likelihood of one or more countries leaving the eurozone, telling a Sunday newspaper that political leaders have yet to offer a meaningful solution to the bloc’s debt crisis.
“We enter 2012 with a very difficult outlook for the eurozone ... with an increasing possibility of countries actually leaving the eurozone,” Peter Sands, chief executive of the Asia-focused bank, told the Sunday Telegraph newspaper in an interview.
“Nobody should underestimate what a big deal that would be, because it would be very difficult to manage the contagion risk, even if it was only Greece. The disruption from that would really be quite significant.
That will have ramifications all over the world.” In France, the European Central Bank’s Christian Noyer defended the currency union, saying the euro could yet become the world’s leading currency if leaders of the 17-nation bloc succeed in tightening fiscal integration.
“In 10 years, maybe the euro will be the world’s number one currency,” Noyer said in an article for Journal du Dimanche to mark the 10th anniversary of the launch of euro notes and coins.
European Union leaders agreed at an emergency summit in Brussels on December 9 to draft a new treaty for deeper economic union, with Britain the only country among the 27 EU nations declining to join the initiative.
“If we implement all the decisions taken at the Brussels summit we will emerge stronger,” Noyer, who is also governor of the Bank of France, said in the article.
However, Journal du Dimanche also published an opinion poll showing 50 percent of French people thought the single currency had been a bad idea, compared with 35 percent who approved.
Eurozone leaders and policymakers have been scrambling to come up with a way to reassure investors and stop the 2-year-old crisis spreading through vulnerable debtor states.
“I think the probability of countries leaving the eurozone has increased because we have had several successive plans announced to solve the problem of the eurozone which simply haven’t convinced the market — and ultimately, the current structure and shape and scope of the eurozone only works if the market believes it’s worth supporting,” Sands said.
“The solutions available at any one time are not necessarily available at the next step and so I think the solutions base has narrowed because we have missed opportunities.”