Thursday, March 5, 2015

The eurozone was never designed with an exit plan in mind. The Maastricht Treaty’s 112 pages make no mention of a way for a country to pull out of the euro project.  At the height of the eurozone crisis in 2011 and 2012, policymakers refused to countenance the idea of a splintered euro bloc.   When pressed on the issue in late 2011, Mario Draghi, the president of the European Central Bank (ECB), would only say the possibility “is not in the treaty”.   He was discussing the chance of a Greek exit - or Grexit - from the euro, a risk that has come back to haunt the project’s architects in recent weeks.   The rise of populist anti-austerity parties across the continent - including Syriza in Greece - threatens to tear apart the bloc. Last week analysts warned that the risk of a euro breakup was greater than at the height of the last crisis.   The odds on a Grexit offered this Friday - before a deal between Greece and its creditors was struck - gave it a more than a one-in-three chance by the end of the year.

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