Drying Up Loans & Opportunity:
While the focus is on Eurozone members as Italy or Greece or Spain or even France, the impact goes well beyond, and it can be as damaging. Hungary is facing continuing crisis and falling into “junk” status in terms of its sovereign debt rating. The UK is more sound in terms of its credit rating, but its economic prospects are being damaged as the whole region faces stagnation, perhaps recession.
The same big banks that are now shedding assets are also pulling in dramatically loan activity. These banks are as important in the non-Euro currency countries as they are within the Eurozone. There are a few exceptions – Norway though is more about its petroleum driven economy and vast sovereign fund reserves. Few others are even remotely as fortunate.
Free of Currency Straightjacket?
However, there is a silver lining – unlike for example Greece or Ireland or Portugal whose recovery could be diluted by the continuing relative strength of the Euro, non-Eurozone members can allow their currencies to more flexibly adjust in terms of valuation and thus competitiveness (although the other side of the equation could be a speculative attack driving their currencies down as was case immediately upon the 2008 financial crisis).
The non-Euro members may also be beyond the center of what are likely to be heated and divisive debates about the future of the Eurozone and the structural flaws that need to be addressed. These non-Euro EU members though will not be free of the debate and ultimately will be affected directly or implicitly. Nonetheless, countries like Poland or Bulgaria might be in position to adjust and even take advantage of their new reality than countries like Greece or Portugal or even Italy which may face a currency straightjacket.
Bosnia & Herzegovina is a special case. Linked to the Euro by the Dayton Accords (through reference to the old German Mark), it is directly affected by the Euro’s fluctuations. However, it is neither a EU or Eurozone partner , thus having no role in the debate regarding the future of its currency. Whether devaluation or currency stability are the better course, Bosnia & Herzegovina continues to be part of the turmoil and straight jacket, but with no room for its own course.
By Ambassador Muhamed Sacirbey
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