Withdrawal from the Eurozone denotes the process whereby a
Eurozone member-state, whether voluntarily or forcibly, stops using the
euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
as its
national currency
Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
and leaves the
Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
. , no country has withdrawn from the Eurozone.
Background
The possibility of a member state leaving the Eurozone was first raised after the onset of the
Greek government-debt crisis
Greece faced a sovereign debt crisis in the aftermath of the financial crisis of 2007–2008. Widely known in the country as The Crisis ( Greek: Η Κρίση), it reached the populace as a series of sudden reforms and austerity measures that ...
. The term "
Grexit" itself was reportedly
[Grexit]
by Kate Mackenzie and Joseph Cotterill, ''Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Ni ...
'' Alphaville, 7 February 2012 first used by
Citigroup economists
Willem Buiter
Willem Hendrik Buiter CBE (born 26 September 1949) is an American-British economist. He spent most of his career as an academic, teaching at various universities. More recently, he was Chief Economist at Citigroup.
Early life and education
Bu ...
and Ebrahim Rahbari in a 2012 report about the possibility of
Greece leaving the Eurozone. In the 2015 edition, the term "Grexit" entered the
Oxford English Dictionary
The ''Oxford English Dictionary'' (''OED'') is the first and foundational historical dictionary of the English language, published by Oxford University Press (OUP). It traces the historical development of the English language, providing a co ...
, defined as "a term for the potential withdrawal of Greece from the
Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
, the economic region formed by those countries in the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
that use the
euro
The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
as their
national currency
Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
.
Speculation followed about other countries, such as Italy, withdrawing from the Eurozone as well,
[Debt crisis: as it happened]
, '' Daily Telegraph'', 11 November 2011 with economist
Nouriel Roubini
Nouriel Roubini (born March 9 1958) is a Turkish-born Iranian-American economist. He is Professor Emeritus (2021–present) and was Professor of Economics (1995–2021) at the Stern School of Business, New York University, and also chairman of Ro ...
submitting in 2011 that "Italy may, like other
periphery countries
In world systems theory, the periphery countries (sometimes referred to as just the periphery) are those that are less developed than the semi-periphery and core countries. These countries usually receive a disproportionately small share of glo ...
f the Eurozone need to exit the euro and go back to a
national currency
Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
, thus triggering an effective break-up of the Eurozone."
[
There are some European cases of a country having a common currency obtaining their own, when countries split apart. ]Czech koruna
The koruna, or crown, (sign: Kč; code: CZK, cs, koruna česká) has been the currency of the Czech Republic since 1993. The koruna is one of the European Union's 9 currencies, and the Czech Republic is legally bound to adopt the euro currenc ...
and Slovak koruna
The Slovak koruna or Slovak crown ( sk, slovenská koruna, literally meaning ''Slovak crown'') was the currency of Slovakia between 8 February 1993 and 31 December 2008, and could be used for cash payment until 16 January 2009. The ISO 4217 code w ...
split from Czechoslovak koruna
The Czechoslovak koruna (in Czech and Slovak: ''Koruna československá'', at times ''Koruna česko-slovenská''; ''koruna'' means ''crown'') was the currency of Czechoslovakia from 10 April 1919 to 14 March 1939, and from 1 November 1945 to 7 F ...
in 1993, both at exchange rate 1:1. Banknotes were stamped as a way of converting them to the new currency. Additionally, the Slovenian tolar and Croatian kuna
The kuna is the currency of Croatia, in use since 1994 (sign: kn; code: HRK). It is subdivided into 100 lipa. The kuna is issued by the Croatian National Bank and the coins are minted by the Croatian Mint. The plural form of the word kuna in Cr ...
were created by leaving the Yugoslav dinar
The dinar (Cyrillic script: динар) was the currency of the three Yugoslav states: the Kingdom of Yugoslavia (formerly the Kingdom of Serbs, Croats and Slovenes), the Socialist Federal Republic of Yugoslavia, and the Federal Republic of Yu ...
, and the Estonian kroon
The kroon (sign: KR; code: EEK) was the official currency of Estonia for two periods in history: 1928–1940 and 1992–2011. Between 1 January and 14 January 2011, the kroon circulated together with the euro, after which the euro became the sole ...
, Latvian lats
The lats (plural: ''lati'' or ''latu'' (if the number can be divided by 10), ISO 4217 currency code: LVL or 428) was the currency of Latvia from 1922 until 1940 and from 1993 until it was replaced by the euro on 1 January 2014. A two-week tran ...
, and Lithuanian litas
The Lithuanian litas ( ISO currency code LTL, symbolized as Lt; plural ''litai'' (nominative) or ''litų'' (genitive) was the currency of Lithuania, until 1 January 2015, when it was replaced by the euro. It was divided into 100 centų (genit ...
were created by leaving the Soviet ruble.
Legal environment
It has been argued["Brussels: No one can leave the euro"]
by Leigh Phillips, '' EUobserver'', 8 September 2011[The Eurozone crisis – the final stage?]
by Charles Proctor, Locke Lord, 15 May 2012 that there is no provision in any European Union treaty for an exit from the Eurozone. Moreover, it has been argued, the Treaties make it clear that the process of monetary union
A currency union (also known as monetary union) is an intergovernmental agreement that involves two or more states sharing the same currency. These states may not necessarily have any further integration (such as an economic and monetary union, ...
was intended to be "irreversible" and "irrevocable."[ However, in 2009, a ]European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centr ...
legal study argued that voluntary withdrawal is legally not possible but expulsion remains "conceivable."[Withdrawal and Expulsion from the EU and EMU : Some reflections]
by Phoebus Athanassiou, Principal Legal Counsel with the Directorate-General for Legal Service
The Legal Service of the European Commission (Le Service juridique – SJ) is the in-house legal counsel to the commission, located in Brussels. It ensures that Commission decisions comply with EU law, preventing or reducing the risk of subsequen ...
, ECB, 2009 Although an explicit provision for an exit option does not exist, many experts and politicians in Europe have suggested that an option to leave the Eurozone should be included in the relevant treaties.["German advisory council calls for exit option in the eurozone"]
by Daniel Tost, EurActiv
Euractiv (styled EURACTIV) is a pan-European news website specialised in EU policies, founded in 1999 by the French media publisher Christophe Leclercq. Its headquarters and central editorial staff are located in Brussels,with further offices in ...
, 29 July 2015
Other analysts[How to exit the Eurozone?]
by Marijn van der Sluis, 22 March 2013 have submitted that there are basically three ways of exiting the Eurozone: by leaving and subsequently rejoining the EU, whereby a renewed membership in the European Union would be possible only when economic convergence had been achieved; through a Treaty amendment; or through a European Council decision. The amendment would involve an extension of Article 50 of the European Treaty that would set out the process for exiting the euro.
A decision by the European Council would "probably" have to be unanimous and "with the consent of the European Parliament
The European Parliament (EP) is one of the legislative bodies of the European Union and one of its seven institutions. Together with the Council of the European Union (known as the Council and informally as the Council of Ministers), it adopts ...
." It would state that a Eurozone
The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
member-state "will no longer be part of the Eurozone" and will become a member-state "with a derogation
Derogation, in civil law and common law, is the partial suppression of a law. In contrast, annulment is the total abolition of a law by explicit repeal, and obrogation is the partial or total modification or repeal of a law by the imposition of ...
", by withdrawing the Council's earlier decision for that state's entry into the Eurozone. Article 139 regulates the terms of this "derogation":
Member States in respect of which the Council has not decided that they fulfil the necessary conditions for the adoption of the euro shall hereinafter be referred to as 'Member States with a derogation'.
The competence of the Council to retract its earlier decision would "possibly" invoke the argument that a given competence to decide on a matter always includes the competence to retract that decision.[ Additionally, this retractile power can be derived from the "flexibility clause" of article 352 TFEU, which grants the Council, on a proposal from the Commission and with the consent of the ]European Parliament
The European Parliament (EP) is one of the legislative bodies of the European Union and one of its seven institutions. Together with the Council of the European Union (known as the Council and informally as the Council of Ministers), it adopts ...
, the ability to unanimously adopt the "appropriate measures" to attain one of the objectives set out in the Treaties as set out in Article 3 of the European Union – essentially ascertaining that staying in the Eurozone would be so "devastating" for the well-being of the people of the member-state, and/or the rest of the peoples of Europe, that an exit would be legitimate in light of the Treaties' objectives. Then, it would be ostensibly possible to take a decision retracting the previous decision that approved entry to the Eurozone.[
Acknowledging that the method of any departure from the Eurozone remains "unknown," legal analysts have pointed out that any potential withdrawal "includes the spectre that euro obligations owed by residents of departing member states might be redenominated into henewly established national currencies."][Eurozone crisis – the corporate perspective]
, Herbert Smith LLP report, January 2012
On the issue of leaving the Eurozone, the European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
has stated that " e irrevocability of membership in the euro area is an integral part of the Treaty framework and the Commission, as a guardian of the EU Treaties, intends to fully respect hat irrevocability"[ The Commission added that it "does not intend to propose nyamendment" to the relevant Treaties, the current status being "the best way going forward to increase the resilience of euro area Member States to potential economic and financial crises.][Text]
of response by Olli Rehn
Olli Ilmari Rehn (; born 31 March 1962) is a Finnish economist and public official who has been serving as governor of the Bank of Finland since 2018. A member of the Centre Party, he previously served as the European Commissioner for Enlargem ...
, , on behalf of the European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
, to question submitted by Claudio Morganti, Member of the European Parliament
A Member of the European Parliament (MEP) is a person who has been elected to serve as a popular representative in the European Parliament.
When the European Parliament (then known as the Common Assembly of the ECSC) first met in 1952, its ...
, 22 June 2012 The European Central Bank
The European Central Bank (ECB) is the prime component of the monetary Eurosystem and the European System of Central Banks (ESCB) as well as one of seven institutions of the European Union. It is one of the world's most important centr ...
, responding to a question by a Member of the European Parliament
A Member of the European Parliament (MEP) is a person who has been elected to serve as a popular representative in the European Parliament.
When the European Parliament (then known as the Common Assembly of the ECSC) first met in 1952, its ...
, has stated that an exit is not allowed under the Treaties.
Withdrawal from the European Union
If a state leaves the European Union, Article 50 of the Treaty on European Union says that "Treaties shall cease to apply to the State in question". If the state has been using the euro as its currency then, rather than form a new domestic currency, it might continue to use the euro unilaterally or by way of a monetary agreement with the EU as Montenegro or Andorra do without being a member of the EU.
Potential operational process
On 18 October 2011, Eurosceptic British businessman and Conservative
Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
life peer Simon Wolfson
Simon Adam Wolfson, Baron Wolfson of Aspley Guise (born 27 October 1967), is a British businessman and currently chief executive of the clothing retailer Next plc, as well as a Conservative life peer. He is the son of the former Next chairman, ...
launched a contest
Contest may refer to:
* Competition
* Will contest
* Contesting, amateur radio contesting (radiosport)
Film and television
* ''Contest'' (2013 film), an American film
* Contest (1932 film), a German sports film
* " The Contest", a 1992 season ...
that offered a £250,000 reward for "a plan for how the euro could be safely dismantled," and for "what a post-euro eurozone would look like, how transition could be achieved and how the interests of employment, savers, and debtors would be balanced."
The winning entry, titled "Leaving the Euro: A Practical Guide,"["Wolfson prize for euro exit plan won by Roger Bootle"]
BBC #REDIRECT BBC #REDIRECT BBC
Here i going to introduce about the best teacher of my life b BALAJI sir. He is the precious gift that I got befor 2yrs . How has helped and thought all the concept and made my success in the 10th board exam. ...
...
News, 5 July 2012 recommended that member-states who want to exit should introduce a new currency and default on a large part of their debts. The net effect, the proposal claimed, would be "positive for growth and prosperity". It called for keeping the euro for small transactions and for a short period of time after the exit from the Eurozone, along with a strict regime of inflation-targeting and tough
monitored by "independent experts". The plan also suggested that "key officials" should meet "in secret" one month before the exit is publicly announced, and that Eurozone partners and international organisations should be informed "three days before". The winning entry's team leader stated said, "if executed correctly, the pain of exit would relatively soon be replaced by a return to growth," something that would encourage other distressed states still in the