Europe: What prospect for the Euro?

If Germany's position is precarious, can the single currency survive?

The recent German government bond auction went off badly, with a sizeable tranche remaining unsold. Cheap borrowing is no longer possible for the Germans, it seems. And, as the New York Times points out, the one thing that could save the Euro - the issuance of Eurobonds backed by all 17 Eurozone countries - has been rejected by Germany as it would drive German borrowing costs up even further.

So, when the top British banking and building society regulator, Andrew Bailey of the Financial Services Authority (FSA), warns "UK banks should be prepared for the complete break-up of the eurozone or the disorderly departure from it of some states" as the London Evening Standard reports, we ought really to envisage a world without a European single currency.

Funny that, as only last week German Finance Minister Wolfgang Schäuble was claiming, somewhat absurdly, that Britain would abandon the pound and join the single currency "faster than people think" the Telegraph noted. Well, it appears certain leading lights in the FSA disagree.

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