Eurozone is doomed: one-size-fits all can’t work says Bank of America Merrill Lynch exec

Saturday, July 15, 2017
By Paul Martin

THE eurozone is on the verge of break up despite France and Germany’s battle to keep it intact, according to one of the world’s biggest investment banks.

Sat, Jul 15, 2017

A warning has been fired over the future of the single currency bloc by a senior employee at Bank of America Merrill Lynch, which he says been falling apart since if was formed close to two decades ago.

Emergency bailouts have been dished out to Greece and Portugal but richer countries, including Germany, have failed to redistribute wealth to poorer eurozone countries.

Athanasios Vamvakidis, who is based in London and has worked for the International Monetary Fund for 13 years before going to work for the US bank, said the situation had led to a split between members and a rise in inequality.

He said the stance changed during the global financial crisis but added “divergence seems to be the norm since the eurozone was formed.”

Mr Vamvakidis said it was a “red flag for the sustainability of the eurozone” and warned poorer countries could quit the bloc due to mounting debt.

He said: “Wouldn’t such countries want to have their own monetary policy at some point?

“Wouldn’t populism find the common currency to be an easy target – which is already happening in some countries?”

He added: “Without growth, debt could prove unsustainable in some countries and populism against the eurozone could find support in some cases, leading to exit of a country left behind.

“The probability that a country, at the core or the periphery, may decide to leave under a populist leadership at some point in the future is not low, in our view.”

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