There is anxiety on the Euro exacerbated by the growing tension between lender and borrower countries.
Prominent German officials have called for the expulsion of Greece from the 17-nation union while France’s socialist government has called for more “shared sacrifice.” Meanwhile, in the financial markets, the back-and-forth bickering between eurozone officials has accomplished one thing: It has weakened the euro.
And you better believe the banks are worried.
“Banks and companies are starting to finance their operations locally,” said former chief economist at Deutsche Bank Thomas Mayer.
“Banks, investors and companies are bracing themselves for the possibility that the euro will break up — and are thus increasing the likelihood that precisely this will happen,” Martin Hesse writes for Spiegel Online (as translated from the German by Paul Cohen).
“There is increasing anxiety, particularly because politicians have not managed to solve the problems. Despite all their efforts, the situation in Greece appears hopeless. Spain is in trouble and, to make matters worse, Germany’s Constitutional Court will decide in September whether the European Stability Mechanism (ESM) is even compatible with the German constitution,” the report adds.
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