# If the Euro fails ?



## bbsrs (6 Nov 2011)

Excuse me if this is the wrong forum, In the event of the failure of the  EURO which seems to be more likely with every passing week what would  happen to mortgage balances if we reverted to the Punt .

Would it be a 1 euro to 1 punt swop for any outstanding balance?
and the same with all money in bank accounts ? 
What interest rate would trackers then follow if the ECB bank was no longer active seeing as it was set up in '98 to facilitate the EURO?
How might it all work ?

If someone thought the euro was going to fail what country would it be best to trasfer your savings to in advance of the Punts reintroduction. Germany or somewhere outside the eurozone?

Thanks.


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## so-crates (7 Nov 2011)

I doubt this is the right forum, this is mortgage arrears, personal debt and negative equity - none of your queries relate to that topic.


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## e_drizzel (7 Nov 2011)

bbsrs said:


> Excuse me if this is the wrong forum, In the event of the failure of the EURO which seems to be more likely with every passing week what would happen to mortgage balances if we reverted to the Punt .
> 
> Would it be a 1 euro to 1 punt swop for any outstanding balance?
> and the same with all money in bank accounts ?
> ...


 
i'd say yes to the first 2 questions. no idea on the tracker rate. pretty difficult to pick a safe currency in these times. some would say gold is the safest currency. spreading the savings across 2/3 jurisdictions (germany, uk, holland) might be the safest option. of course there will always be the currency exchange risk but at the same time leaving the savings in the irish jurisdiction is a risk imho.


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## Guns N Roses (8 Nov 2011)

Don't worry! The EURO will not fail. France & Germany will make sure of that.


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## Devestor (8 Nov 2011)

For trackers would the rate still be lets say ECB plus 1% even though the principle and repayments are now in a different currency? If tracker rules simply define the rate with referecne to ECB would it make any different if Ireland was booted out?


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## Chris (8 Nov 2011)

A lot of your questions have been dealt with in other threads, so I would suggest a search of the different threads.

As for the previous "Don't worry" comment, I would ignore it. If you want to get a good idea of bad things really are with the Euro and other fiat currencies I would recommending reading this: http://www.amazon.co.uk/Paper-Money...5758/ref=sr_1_1?ie=UTF8&qid=1320785419&sr=8-1


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## horusd (8 Nov 2011)

Curiously, Enda today refused to say whether the gov't have contingency plans for the failure of the Euro. That's not exactly  encouraging, reminds me a bit of the two lads saying they'd heard nuthin about the IMF being in town. 

Having said that, the Mutually Assured economic destruction of the Euro's collapse lead me to think it won't fail, or not completely.


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## serotoninsid (8 Nov 2011)

Devestor said:


> If tracker rules simply define the rate with referecne to ECB would it make any different if Ireland was booted out?


This is something that has come up on a few occasions on aam now.  I guess the question is will your mortgage still be in euro?  There seemed to be mixed opinions on this.  Clearly, if it continued in euro - then everyone would be in deep (or should i say even deeper) water...


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## bbsrs (9 Nov 2011)

If the euro fails they couldn't leave mortgages in Euro , could they?


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## Mpsox (9 Nov 2011)

serotoninsid said:


> This is something that has come up on a few occasions on aam now. I guess the question is will your mortgage still be in euro? There seemed to be mixed opinions on this. Clearly, if it continued in euro - then everyone would be in deep (or should i say even deeper) water...


 

Why would it continue in Euro? My bank is an Irish bank, if the Euro failed and we had a "new punt", then I'd expect my mortgage to be converted from Euro to new punt at whatever the conversion rate would be. Likewise, I'd expect my salary to be converted as well. This would be in line with what happened when we joined the Euro in the first place. 

As for the ECB rate, I would imagine, deep in the bowels of your mortgage contract, there is something that allows for it to transfer either to a variable or Irish Central Bank rate if the ECB rate no longer existed or if we left the euro. After all, many trackers predate linking to the ECB rate so there must have been some mechanism in there at the time of the changeover


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## 44brendan (9 Nov 2011)

There is no clause in standard mortgage contracts to cater for the break up of the single currency. Yes there is a risk that a break-up may happen but whether Ireland will exit the currency as part of an break -up remains open to question. This same situation arose when the Euro was first introduced to Ireland. I.e. Punt mortgages were exchanged to Euro at the official rate on a set date. If Ireland were to exit the currency an opposite transaction would happen. I suggest that there is no contingency plan as yet for this occurrence.


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## eamo27 (10 Nov 2011)

Devestor said:


> For trackers would the rate still be lets say ECB plus 1% even though the principle and repayments are now in a different currency? If tracker rules simply define the rate with referecne to ECB would it make any different if Ireland was booted out?


The bank bailout has ensured trackers will be subsidised by variable rate holders from now on.


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## bbsrs (10 Nov 2011)

eamo27 said:


> The bank bailout has ensured trackers will be subsidised by variable rate holders from now on.




And when the ECB rate rises and the interbank lending rate drops enough will the trackers then subsidise the variable rate mortgages?


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## serotoninsid (10 Nov 2011)

mpsox said:
			
		

> Why would it continue in Euro?


Don't shoot the messenger!  I was only bringing it to peoples attention that this discussion has arisen before - and some had suggested that euro debt would remain euro debt (it would be in the banks interests, would it not - if it remained euro debt?)?   Please run a search of aam - and have a read of the relevant threads.  I would welcome any clarification anyone could provide - as I don't think anyone could provide a definitive answer on this...and it's something that mortgage holders should be up to speed on...




44brendan said:


> This same situation arose when the Euro was first introduced to Ireland. I.e. Punt mortgages were exchanged to Euro at the official rate on a set date. If Ireland were to exit the currency an opposite transaction would happen. I suggest that there is no contingency plan as yet for this occurrence.


If that is the case, won't ALL irish mortgage holders be better off? i.e. punt will go through a series of devaluations - meaning the debt in real terms drops??


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## 44brendan (10 Nov 2011)

You were correct in stating that you will not get a definitive answer on this until a Euro break-up is imminent. It will not be practical for Banks to operate in Euro where the currency in this country has changed. Why would all mortgage holders be better off if a realistic rate is set to transfer existing Euros to Punts. It would not be a 1 for 1 swap?


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## serotoninsid (10 Nov 2011)

@44brendan:  I have a strong interest in the subject and welcome more comment from those that are better placed to present a credible opinion on the possible outcome here.  However, despite my interest, I have no knowledge of such things - so won't comment further.


			
				44brendan said:
			
		

> It would not be a 1 for 1 swap?


If it won't then what's it likely to be, who would set it - and presumably the setting of the rate has far reaching implications for many many people....


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