There is an inverse correlation between imminent poverty and the commitment to the Rule of Law. If ever you doubted that fact, then kop this from Poland’s finance minister Jacek Rostowski: he thinks the ECB should announce its intention to buy unlimited amounts of sovereign debt in the event of a Greek exit from EMU. As to whether this is against EU or ECB statutes, Rostowski describes the fundamental principle underpinning the role of central banking as “a moot point”.
The rules are rapidly being chucked out of the window. The Bank of Greece has adamantly denied media reports alleging plans to restrict deposit withdrawals and impose capital controls in the country. This too is the very antithesis of what the EU is supposed to be about, but I can confirm to you with reasonable certainty that the reports are correct.
So with things getting heavier by the day, perhaps we should all bear the following in mind:
The ECBis entitled to call upon the Bank of England for up to €50 billion of the UK’s currency reserves. Under Council Regulation 1010/2000 of 8th May 2000, the ECB has the legal right to call on individual member countries’ national reserves (€50 bn in the case of the UK) should the viability of the ECB be at risk.
The EIB can call upon up to €35.7 billion from the UK, should it lose money on the loans that it has made to governments and organisations in vulnerable economies such as Greece, Portugal, Spain, Italy and Ireland.
The UK currently has a €60 billion liability to the European Financial Stabilisation Mechanism (EFSM). Solvent members are required to jointly take on the insolvent member’s debt.
The UK’s €1.9 billion of paid-in capital to the EIB and a further €1.6 billion to the European Central Bank (lodged to pay the UK’s share of its costs) is also at risk.
Listen guys, if everyone else has decided the game is now no-holds-barred underwater Roman amphitheatre kick-boxing, maybe we should be reviewing our approach as well. As in, maybe we should just default on these commitments and take the consequences.
What are they likely to be? In the event of a European collapse, not very much frankly.