BOA: Irish pound could increase in value
Analysts from the Bank of America have said that the introduction of a new Irish punt could rise against other currencies in the event of the euro breaking up, based on exchange rates last month.
The research shows that Ireland is the most competitive of the big euro economies and that other major nations would face a devaluation against the dollar.
Italy would face 11% devaluation, Spain, a 20% drop, Portugal, a 17% drop and France would face a 7% cut in its value.
Should the euro cease to exist, only Germany, the Netherlands and Ireland, would face a situation where their currencies are under-valued and as such, would face an increase in their value against the dollar.
The Bank of America has iterated that it does not expect the euro to go under and that these are purely hypothetical situations. However, a source did say that in the event of a break up, there could be financial chaos.
“There would be large shocks to all the currencies involved, with violent swings in the euro. No model can fully account for this.”
Economists say the main result of a chaotic break-up of the euro would not be the effect in currencies, but the financial crumbling of a large part of the European banking system and another great depression the likes of which the world has not seen for quite some time.
In Focus
Eamonn Garvey, ACMA Job Title: Partner What does your job involve? I ensure that our clients are compliant on both a personal and company level with regard to tax and company legislation. Also, as a founding partner, my job involves liaising regularly with our clients in relation to the challenges they face in business. This [...]
