# What happens if the Euro Collapses?



## UptheDeise (16 Feb 2009)

I was just wondering what would happen if the euro collapsed? I have an investment policy which is based on the Euroxx (or whatever it's called).

So what would happen if the worst came to the worst and the euro collapsed?


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## lemur (16 Feb 2009)

If that happened and right now I would say its unlikely but possible see

http://www.telegraph.co.uk/finance/...t-Europe-will-lead-to-worldwide-meltdown.html

we would almost certainly be forced to rejoin sterling or a euro currency spin off.


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## Deise Doll (16 Feb 2009)

Thanks Lemur, really feeling a lot more postitive now after reading that!!!


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## lemur (16 Feb 2009)

Well everybody needs to take responsibility for their financial situation and protect themselves. This is not a time for wishful thinking.


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## beekeeper (16 Feb 2009)

I would imagine your investment is based on an equity based instrument and priced in euros.  You should find out exactly what your investment is.  

You cant invest euros on euros doesnt make sense !


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## UptheDeise (17 Feb 2009)

beekeeper said:


> I would imagine your investment is based on an equity based instrument and priced in euros. You should find out exactly what your investment is.
> 
> You cant invest euros on euros doesnt make sense !


 
Yes my investment is an euity based product priced in euros. What I would like to know is what would happen if the Euro were to collapse? How would my policy be validated?


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## badabing (18 Feb 2009)

Your investment falls by the fall in euros


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## PMU (18 Feb 2009)

badabing said:


> Your investment falls by the fall in euros


 Not so . If by collapse you mean ‘devaluation’, a  collapse in value of the euro would have no impact as you would still be exposed only to market risk, i.e. to changes in the price of the equities in the index, all of which are euro-denominated.   So your return would still be based only on changes in the price of the equities.    [which could, of course, rise if the euro devalued.]
If by ‘collapse’ you mean the euro system disintegrates, you would then be exposed to both market risk plus currency risk, i.e. the change in the values of the currencies in which the equities would then be denominated vis-à-vis your functional currency.


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## PMU (18 Feb 2009)

..


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## PMU (18 Feb 2009)

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