Ireland And The Euro
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Ireland and the Euro
Having relatives still in Ireland I figured that I would look into the Irish economy and what would happen if Ireland left the European Union. In every article I read and each outcome that came about was not a good one. But for a very few individuals the majority of people believe that Irelands future is tied directly in with the euro as a currency and the EU as a partner.
In the last few months Bruce Arnold, chief critic for Irish independence, and David McWilliams, economist with the Central Bank of Ireland, have been making claims with loud protest that Ireland should get out of the euro and reestablish its own currency. They are not alone in their stance. I think the individuals who stand behind this are in effect supporting an economy that is heading off a cliff. If Ireland survives a fall of a cliff, it will be rushed to a hospital, rolled into the critical care unit, and at some point maybe start to feel better. Getting healthy is great by any standard. But who in the heck would want to go over a cliff and at some point, maybe get its health back? Not many countries that I know of.
Getting rid of the euro is at most an intriguing plan. Anyone who supports a policy like this should look to the future on this type of action. Leaving the EU which is so intertwined and trying to bring in its own currency is not something that can happen overnight. This decision would have to have weeks if not months in preparation. And trying to keep this a secret would nearly be impossible. One of the main outcomes would probably be the loss of monies from nearly all of the Irish financial markets, and then would head for the unmistakable death of the Irish financial institution.
Rumors flourish in Dublin that the Central Bank of Ireland may be back printing punts (Irelands previous currency) just in case the euro zone does implode. And while that may be true, I dont know, but one would hope that there was some backup plan in place just in the case the whole euro project blew up. Then again, given the previous record of European policymakers in dealing with the crisis so far, it wouldnt come as too great a shock if there was no plan B in existence (OHalloran).
But given that it took many years of planning to bring a single currency project into play and create the euro, it is hard to believe, as some people are saying, that Ireland could just go back to the punt overnight. So Ireland is not going to simply finish with the euro on a Friday night and then out of the blue come back to jobs on a Monday morning with the previous currency back in circulation.
Even if the Central Bank of Ireland is back to printing punts, are businesses and other retailers putting the preparations in action for a return to the former monies? I think not. As a result the probability of this incident happening any time soon is zero in my view. I still believe the will is there among European policymakers to make the euro work, and the price of a country leaving the system would be very harmful not just for the country concerned but also for the other euro bound countries left behind. The Central Bank of Ireland would have to enforce capital controls to keep wealth in the country, and Ireland would go backward to the good old days of the 1970s when I remember you were prompted at airports to clear your pockets and wallets to show authorities the sum of cash you were taking out of Ireland and why. For an American citizen this just blew me away.
This would undoubtedly lead to the EU stopping any type of bailout program and help for the banks of Ireland. Any monies that Ireland produces will have no strength, because all of the debts owed up to this point from the private and public areas would be in euro, and the devalued legal tender would double if not triple Irelands debts and still stay in euro. The monies owed by Ireland would expand, not disappear. If Ireland went into bankruptcy and was unable to repay the debts that were owed, it would be left out of the global markets for numerous years and a long lasting risk tag would be stapled to any borrowed monies in future dealings. Economic downfalls would surface from Ireland exiting the EU and would cause the economy to tank. Without avenues to the global market, the Irish government would have to instantly balance the budget during the slide of the economy.
Those people who want to exit the EU should answer some reasonable questions. Would any credibility be given to the new currency? What would be the maximum on the interest rates the loads of individuals and public had accumulated? Dont you think that rates in interest would sky rocket? Wouldnt it also be reasonable that it might cause the international communities to shy away from investing in outside companies that are already there in Ireland?
The United Kingdoms increasing departure from Europe may open the door for Ireland to entice investments from up and coming