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Bank managers say one country will leave eurozone in the next five years
By Catholic Online (NEWS CONSORTIUM)
June 15th, 2012
Catholic Online (www.catholic.org)
June 15th, 2012
Catholic Online (www.catholic.org)
According to a survey of central bank reserve managers -- who
collectively control more than $8,000 billion, at least one country will
leave the eurozone in the next five years. The poll highlights the
concern among central bank officials on the eve of elections in Greece
this weekend. Many see the elections as a pivotal moment in the future
of the single currency.
Both the central bankers and SWF managers says that a dissolution of the eurozone was the greatest risk to the global economy for the next year. Nearly three quarters of them said at least one country would leave the eurozone within five years. A quarter of those surveyed said that more than one country would drop the euro.
Some central banks had recently shored up confidence in the single currency, as the reserve managers hold important influence over foreign exchange markets with their decisions about how to allocate their assets.
Investors of all types in recent months have been unnerved at the prospect of a nation jumping the single currency system. Grim economic events have led to a sharp sell-off in European equities, a jump in the bond yields of peripheral eurozone governments and a slide in the value of the euro.
Greece's uncertain future in the eurozone, with a crucial election this weekend, in addition to the banking crisis in Spain has all led to undermine investor confidence.
Some sovereigns to have begun diversify away from the euro. The Swiss National Bank revealed said in May that it had doubled its holdings of sterling in the first quarter of the year as it reduced its exposure to the euro. Analysts and traders say that other reserve managers have followed this lead.
Reserve managers predicted that by the end of the year the euro would be trading between $1.15 and $1.25, compared to a level of around $1.26 on Thursday. A small minority said that the euro would no longer exist by the end of the year.
The central banks and SWF mangers, however, remain bullish on the prospects for gold. They predicted that the precious metal, together with emerging market debt, would be the best performing asset class between now and the end of the year.
The price of gold has seen little growth this year, as investors have grown wary of its ability to act as a haven in times of crisis. On Thursday it was trading at $1,620.70 a troy ounce, up 3.5 per cent since the start of 2012.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.