Bank of England readies Plan B if euro collapses
Meanwhile, in the background, commercial printers are preparing a drachma roll-out.
Contingency plans for a euro collapse were under the microscope yesterday when David Cameron met Sir Mervyn King, chairman of the FSA Lord Turner and the Chancellor. The risks are high. A fragmented, stressful break-up would have lasting damage on the British economy.
Quoted in the Telegraph, Monetary Policy Committee member Dr Ben Broadbent said "the still unlikely worst case risks in the euro area actually to be realised, then our own monetary policy would again play its part in mitigating the impact."
Commercial printer De La Rue - the world's biggest commercial bank note printer - has reportedly prepared contingency printing plans. Shares in the company recently soared (the company reported underlying pre-tax profits of almost £58m this morning).
Keeping it low keyFew companies have publicly gone on record so far about their own contingency planning efforts, though Lloyds boss Richard Ward has made some noises about the situation, worried about write-downs on existing investments and the deeper recession a eurozone crisis would drag behind it.
Meanwhile the Government is doing their best to sound business-like, passing off yesterday's conversation as a routine part of planning. Pinning down figures on the cost of a euro break-up remains impossible. The bigger issue is confidence: break-up would cause massive anxiety and capital flight as trust in Europe's banking system deteriorates.
Yields on German 10-year debt were driven down to 1.346% this morning. Investor protection money is now at its lowest level in living memory.