Canadian Investment Review

Whither the Euro?

Written by Caroline Cakebread on Friday, June 10th, 2011 at 4:45 pm

1193473_dark_euro_3 “The euro makes no economic sense. It probably won’t survive.” So said Bruce Campbell, Investment chairman, Pyrford International in London. He was speaking today at a lunch session on global market conditions held by BMO Global Asset Management. Campbell puts the blame for much of Europe’s woes squarely on the back of the euro, noting that before the common currency was adopted, it was a lot easier to spot the risks in the European region – and to avoid them. Said Campbell, “Before the introduction of the euro, interest rates reflected sovereign risk.” Problems in countries like Greece and ¬†Spain could easily have been identified prior to the adoption of the euro – and he notes, the euro isn’t going to be around for much longer.¬†Whether it disappears next week or next year, Campbell said, the euro has to go.

Just how European countries will go about shedding the common currency remains uncertain, said session moderator, Rajiv Silgardo, co-CEO of BMO asset Management, noting that speakers had been sharing ideas on what could happen next prior to the session. One possible direction, Silgardo said, could be the introduction of two separate currencies for Europe, in which strong and weak economies are separated out. Or, stronger countries like Germany could simply opt to step out of the currency altogether, making the euro irrelevant and pushing other countries to revert to former currency models.

One thing everyone seems to agree on, however: the euro is on its way out.

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