Euro on the brink of DISASTER: Germany’s debt plans could send currency into MELTDOWN
GERMANY could spark the eurozone’s collapse with controversial changes to government debt and bailout rules, a leading economist has warned.
By LANA CLEMENTS
Express.co.uk
Sat, Feb 20, 2016
Professor Peter Bofinger, a special advisor to the Berlin-based government, said Italy and Spain could potentially be forced out of the euro and back to their own currencies under new plans.
Under the proposed scheme, investors who hold Eurozone government-issued debts through bonds would have to accept write-offs on the value of their investment before the group steps in to offer bailout cash.
Professor Bofinger believes the move could cause a “bond crisis” where investors dump debts in countries such as Italy, Spain and Portugal, for fears that they could have to accept the write downs, sending the cost of borrowing sky-high.
He said: “It is the fastest way to break up the eurozone.
“A speculative attack could come very fast. If I were a politician in Italy and I was confronted by this sort of insolvency risk I would want to go back to my own currency as fast as possible, because that is the only way to avoid going bankrupt.”
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