08-22-2017, 02:23 PM
Berlusconi’s point then is that a parallel currency could be launched entirely legally within the constructs of European treaties, with the ECB potentially powerless to intervene once the decision has been taken. Either way, regardless of whether Italy goes down the path of an explicit parallel currency or the introduction of small-sized Italian government securities, it’s clear the will to break up the euro’s monopoly in Italy is growing. According to Citi’s analysts more than two thirds of Italian voters currently support parties with an anti-euro stance. That makes Italy a much greater source of potential European Union instability than most people appreciate. Not least because if Italy can go parallel, so can other countries.
Parallel currency talk gains ground in Italy | FT Alphaville
The exchange rate has risen 6pc in trade-weighted terms since early May. This is already eroding corporate earnings on European bourses. Germany’s DAX index of equities and France’s CAC 40 have both slipped 4pc since then. Corporate treasurers have budgeted for an exchange rate between $1.08 and $1.13 for this year and are not fully shielded on the derivative markets. The twist is that some countries will be hurt more than others. The International Monetary Fund said in its latest External Sector Report that (as of late 2016) the euro exchange-rate was 15pc undervalued for Germany, but overvalued by 7.5pc for Spain, 6pc for France, and 5pc of Italy. The situation has since deteriorated for the weaker states. The Club Med bloc as a whole is roughly 15pc overvalued.