Barry Eichengreen of Berkeley writes on Vox about the possibilities of leaving the Euro for countries like Greece. I came across this via Paul Krugmann, the Nobel Prize guy, discussing the possibility of Greece taking a Eurozone holiday as raised by Harvard's Martin Feldstein in the FT. (Not much doubt what economists are chatting about over the last few days.
Now, I have only a shaky grasp of academic economics, as a reading of this blog will not doubt confirm, but I do know a lot about software systems, and I have been through the Euro introduction with SAP. When Eichengreen talks about the reasons why a Euro departure would not be possible, he is bang on the money.
"The insurmountable obstacle to exit is neither economic nor political, then, but procedural. Reintroducing the national currency would require essentially all contracts – including those governing wages, bank deposits, bonds, mortgages, taxes, and most everything else – to be redenominated in the domestic currency. The legislature could pass a law requiring banks, firms, households and governments to redenominate their contracts in this manner. But in a democracy this decision would have to be preceded by very extensive discussion.
And for it to be executed smoothly, it would have to be accompanied by detailed planning. Computers will have to be reprogrammed. Vending machines will have to be modified. Payment machines will have to be serviced to prevent motorists from being trapped in subterranean parking garages. Notes and coins will have to be positioned around the country. One need only recall the extensive planning that preceded the introduction of the physical euro."
One of the reasons that SAP grew so effectively over the period of the nineties was the Y2K threat, if you remember that one, and the Euro changeover. 1999 for the virtual currency, 2000 for the bug, 2002 for the physical notes. Damn near killed all of us with the workload. The whole IT business was trembling like a shitting dog with fear over that, and that was in benign economic conditions. Now imagine doing the same in a period of economic dislocation? My first one thought was, what would you offer to pay the implementation staff in? The currency you are giving up which might retain value, or your new one, which won't?
No, the Euro is real roach motel, you check in but you can't leave alive.
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