Money market operators get ready for break-up of the euro
GLOBAL money market operators are preparing for a possible break-up of the euro, according to a report from Dow Jones newswires.
According to the report, CLS Bank International, a business that processes foreign exchange trades for global banks, has started running stress tests to see what's likely to happen if the euro breaks up.
The CLS business is mostly owned by 63 banks that use its services. Its work is supervised by the New York Federal Reserve.
The fact that CLS is working on plans to cope with a possible euro break-up does not mean the company thinks such a scenario is likely, but it means it no longer believes a break-up is unthinkable.
Last week Japanese bank Nomura said a euro break-up is a "very real risk".
It issued a note detailing the legal implications for contracts if the euro breaks up. The report said the small print of bond contracts will ultimately decide whether debt continues to be owed in euro or is switched to a new (or revived older) currency the way Irish financial contracts switched to euro from punts during the original euro changeover.