Food for thought: What will happen if EUR were to collapse

There is a lot of speculation regarding the collapse of EUR. My guess is that it will not happen because of the great economic impact to the world if this were to happen. In a way, I think it is too big to fail.

There is a saying that the PIIGS countries will be better off if they are not tied to EUR. Personally, I think these countries will be worse off if they were to transform themselves out of EUR. This is because the root cause of their problem is their ability to repay their debts. It is never about EUR. Getting out of EUR may return the monetary control to these central banks. But, the loss of confidence in these countries will still be there. In fact, without EUR and the support of EU, it will just expedite the eventual collapse of these economies and their financial systems.

If these countries were to default on their debts, the banks and financial institutions in Germany and the rest of EU countries will definitely face huge losses. It will cause some of these banks and financial institutions to fail. The consequences will be deadly to the economies round the world and the domino effect will eventually pull the rest of the world back into the global crisis that we have witnessed in 2008. This time round, I do not believe quantitive easing monetary policies will be able to pull us out of this mess so easily.

The snowball effect of this crisis is too huge and I doubt anybody will want to see this happen.