For each county to go back to their own currency would by a disastrous outcome:
'Coordinating the unwinding of cross country counter liabilities would be a nightmare given the level of interlocking in the corporate and sovereign bond markets, and the sudden disappearance of one of the major global currencies of reference would cause havoc in financial markets'.
That's why he proposes a split of the Eurozone, with the following qualifications:
- Germany will lead the northern part. Other then Germany these countries will be in there as well: Netherlands, Finland, Austria. Estonia and Belgium will probably be a northern members as well according to the author. I am not convinced about Belgium.
- Portugal, Spain and Italy will naturally be in the southern group, with Slovenia and Slovakia being possible candidates. It is not clear what France would do. In many ways it belongs to the northern group, but political and cultural ties might let France decide to lead the southern group.
- Ireland an Greece might decide to opt-out.