martedì 14 febbraio 2012

Frightened Eurogroup to speak by phone


Juncker - Eurogroup to speak by phone on Greece


Luxembourg's Prime Minister and Eurogroup chairman, Jean-Claude Juncker (L) talks with Greece's Finance Minister Evangelos Venizelos at the start of a Eurogroup meeting at the European Union council headquarters in Brussels February 9, 2012. REUTERS/Yves Herman

BRUSSELS | Tue Feb 14, 2012 7:07pm GMT
(Reuters) - Eurogroup President Jean-Claude Juncker has invited euro zone ministers to a conference call on Wednesday, February 15, to discuss a second Greek programme, he said on Tuesday, changing a previous plan to hold a meeting with the ministers in Brussels.
Juncker said the format for the conference had been changed because he was still waiting to receive assurances from Greek political leaders over the implementation of a reform programme, and other technical work remained to be done.
"It has appeared that further technical work between Greece and the troika is needed in a number of areas, including the closure of the fiscal gap of 325 million euros in 2012 and the debt sustainability analysis," Juncker said in a statement that followed a preparatory meeting for the event.


"Furthermore, I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme," he said.
"Against this background, I have decided to convene ministers to a conference call tomorrow in order to discuss the outstanding issues and prepare the ordinary meeting of the Eurogroup on Monday, 20th February 2012," he said in the statement.
(Reporting By John O'Donnell. Editing By Sebastian Moffett.)

Detained Credit Swiss banker's fate

Detained Swiss banker's fate up in the air






FORT LAUDERDALE, Florida (Reuters) - A Swiss private banker, held on a criminal complaint for 13 months without a formal indictment, was on Monday given 60 more days by a Florida court to go on trying to resolve the issue with U.S. authorities.

Christos Bagios, a Greek citizen and Swiss resident, was due either to be indicted or have his case dismissed, but instead was granted the extension by Judge Lurana Snow in a federal courtroom in Ft. Lauderdale.

Bagios worked at Credit Suisse AG from early 2009 until this month, according to public securities records, and at UBS AG,, the Swiss bank giant, from 1993 to early 2009.

Under federal rules of criminal procedure, U.S. authorities have 30 days after bringing a criminal complaint to either indict a defendant or dismiss charges. An exception arises if, as in this case, the defendant waives his right to hearings that would result in an indictment or a dismissal.

Bagios has repeatedly, with the U.S. government's blessing, waived that right, most recently on Monday.

"Absent extraordinary circumstances, judges are loath to allow waivers for extended periods of time," said Robert Katzberg, a white-collar criminal defense lawyer in New York with clients of Swiss banks. "This is the longest waiver I have ever heard of, and by a lot."

Tax lawyers say the unusually long delay raises questions over whether Credit Suisse is seeking to protect Bagios from indictment as part of the bank's efforts to resolve its own legal situation with U.S. authorities over suspicions that it enabled scores of wealthy Americans to evade taxes through undeclared Swiss accounts.

Credit Suisse acknowledged last July that it had received a target letter from the U.S. Department of Justice notifying it that it was formally under criminal investigation for selling tax-evasion services to wealthy Americans. The bank has said it is cooperating with the investigation.

Bagios was arrested in New York in January 2011 and accused in a criminal complaint of helping about 150 U.S. clients hide as much as $500 million from the tax-collecting IRS when he worked at UBS.

He was transferred to Ft. Lauderdale, released on two bonds that together total $650,000, put up in a housing complex under house arrest and forced to wear an ankle monitoring bracelet.

At the time of his arrest, Bagios was head of Credit Suisse's Relationship Management West Coast group, a private banking unit that is part of Credit Suisse Private Advisors in Zurich, according to the bank's website.

(Reporting by Kevin Gray in Fort Lauderdale, Florida, and Lynnley Browning in Fairfield, Connecticut; Editing by Richard Chang)

lunedì 13 febbraio 2012

US banks gamble $5 million per US household


1% US banks gamble $5 million per US household; $532 trillion total


Reuters and wanttoknow.info provide prima facie evidence that the US 1% runs Wall Street as rigged-casino gambling to transfer wealth from the 99% to themselves. The amount of money fraudulently gambled is not millions of dollars, not billions, not even tens of trillions, but over five hundred trillion ($532,000,000,000,000).
Look at Demonocracy’s images to get an idea of this magnitude of money.
Let this sink in: $532 trillion means that the 1% US banksters gamble over $5 million dollars for every US household and $1.7 million for every American.
It also means that the 1% has cooperation from “leadership” in Congress, law enforcement, and almost all corporate media to have this gambling as the core of the 99%’s mortgages and pension funds, with the criminal fraud of representing this as “investments,” “regulated,” and “fair.”
Ending global poverty would be accomplished with an annual investment of $100 billion a year for ten years. This would save the lives of a million children who die from preventable poverty each month, is less than 0.7% of the developed countries’ GNI, has reduced population growth rates in every historical case, and is the best way the CIA concludes to reduce terrorism. The annual amount to end poverty is 0.02% of what the top five US banks gamble every year.
Excerpts from Reuters and www.wanttoknow.info:
(Reuters) - U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department's criminal division, were partners for years at a Washington law firm that represented a Who's Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.... Reuters reported in December that under Holder and Breuer, the Justice Department hasn't brought any criminal cases against big banks or other companies involved in mortgage servicing, even though copious evidence has surfaced of apparent criminal violations in foreclosure cases.
OCC’s Quarterly Report on Bank Trading and Derivatives Activities: Third Quarter 2011
December 2011, OCC (U.S. Office of the Comptroller of the Currency, Administrator of National Banks)
http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq311.pdf
The OCC’s quarterly report on trading revenues and bank derivatives activities is based on Call Report information provided by all insured U.S. commercial banks and trust companies, reports filed by U.S. financial holding companies, and other published data. The notional amount of derivatives held by insured U.S. commercial banks decreased $1.4 trillion, or 0.6%, from the second quarter of 2011 to $248 trillion. Notional derivatives are 5.7% higher than at the same time last year. Derivatives activity in the U.S. banking system continues to be dominated by a small group of large financial institutions. Five large commercial banks represent 96% of the total banking industry notional amounts. Insured commercial banks have more limited legal authorities than do their holding companies.
Note: Graphs in this report show that the holding companies for the top five banks also control massive amounts of derivates totaling $326 trillion! The holding companies JPMorgan Chase, BofA, Morgan Stanley, Citigroup, and Goldman Sachs have over $311 trillion in derivates, 95% of the total U.S. market. So these banks and their holding companies combined own $532 trillion in derivates, equivalent to roughly $75,000 for every person on the planet. What are the bankers doing? If the above link fails, click here.
After 15 years of my own research after US political leadership reneged on all promises (public and private) to end poverty after we led to create the Microcredit Summit in 1997, here's my best explanation of what's driving economics:


Continue reading on Examiner.com 1% US banks gamble $5 million per US household; $532 trillion total - National Nonpartisan | Examiner.com http://www.examiner.com/nonpartisan-in-national/1-us-banks-gamble-5-million-per-us-household-532-trillion-total

Greek people have gone to war

An Observer in Athens: "The Greek people have gone to war against the system"


Photo by our Observer @ypopto_mousi. 
While the Greek parliament voted to approve the country’s sixth round of austerity measures last night, outraged protesters rampaged in the streets. Our Observer tells us that the use of violence is now no longer limited to anarchists and hooligans, ordinary protestors are also turning to violence as their exasperation reaches new heights.
Protesters and riot police clashed late into Sunday night. Police sprayed protesters with tear gas, and a number of protesters fought back by throwing stones and Molotov cocktails. Banks and hotels were set on fire, and luxury store windows were smashed. The Health Ministry report that about 50 people were injured.
Amateur videos uploaded online show scenes of urban guerrilla warfare in the very heart of Athens. These clashes are the worst Greece has experienced since the death of a teenager, killed by a police officer, set off riots in 2008.
Police officers on motorcycles drive into a crowd of protesters. Video published on YouTube by Perseus999
Police officers shoot tear gas at protesters, who fight back by throwing all sorts of projectiles. Video published on YouTube by TheVisehrad
Protesters shoot what looks like tear gas or smoke bombs on the police. For the first time since the start of the demonstrations, protesters reportedly used flame throwers and firebombs.
CONTRIBUTORS

“A lot of ordinary protesters helped to deface buildings”

Our Observer, who asked to remain anonymous, is an Internet consultant in Athens. He has published several photographs from Sunday’s protest on Twitter.

In contrast with past demonstrations, yesterday's protesters were really ready to fight in order to keep parliament from voting. As usual, anarchist from the extreme left attacked storefronts and public buildings. Of course there were hooligans and looters. But this time, a lot of ordinary protesters helped to deface banks and businesses – for example a Starbucks café – because for both old and young, they are symbolic of a common enemy, as they are a part of the current economy.
The police were also more than aggressive. There are a number of videos that clearly show they provoked us to create a situation where they would have the right to use tear gas and other chemical products. Before, people just watched as the police cracked down on protesters. Now, nobody stands by with their arms crossed, which explains yesterday’s clashes. One could say that the Greek people have gone to war against the system."
See more photos by our Observer @ypopto_mousi on Twitter.  

“It’s as though a civil war took place last night"

Nikos Karamfyllis is a sales manager in Athens. He followed yesterday’s protests on television.

I felt like I was in Kabul. This morning, the air still reeked of tear gas. There was debris everywhere; whole buildings were charred. It’s really as though a civil war took place last night, or a revolution. I don’t understand why the police let things get so out of control, especially considering that the event had been planned for several days and everyone knew that it was going to get ugly.
A lot of people think, and I count myself among them, that the authorities deliberately mismanaged the situation to deter people from going out and protesting. I don’t know if it’s true, but it has certainly worked. I personally did not go out and protest because I thought it would be too dangerous."

During a protest in the northeastern city of Thessaloniki, police threw teargas on a peaceful protest march. Video published on YouTube by gmezertz

Morgan Stanley and 'Dottor StranaMonti'


Morgan Stanley’s most mysterious footnote — Part 1 & 2


(7) On December 22, 2011, the Company executed certain derivative restructuring amendments which settled on January 3, 2012. …
This mysterious little footnote announced to the world that in the fourth quarter, Morgan Stanley managed to arrange a deal that reduced the bank’s net exposure to Italy from $4.9bn to $1.5bn.
As the deal settled on January 3, the figures in Morgan’s Q4 balance sheet didn’t reflect its impact; hence the footnote. It does, however, mean that by the start of 2012 Morgan Stanley’s overall peripheral country exposure has dropped from $6.4bn to $3.1bn. Not a bad way to begin the year.
In addition to that, the bank recorded a $600m boost to net revenue from the dealin the fourth quarter – when the deal was agreed but hadn’t yet settled.
What is Morgan Stanley up to? All the other banks (and FT Alphaville) certainly want to know…
Unfortunately the bank isn’t talking. No matter, FT Alphaville has a few ideas and so does IFR’s Chris Whittall, who has been up to his usual expert sleuthing. More on that in a moment.
First, a quick explainer
Let’s begin with Morgan Stanley’s country risk exposures as declared for Q3 and Q4, which we’ve spliced together in the graphic below. The Q3 numbers are on top, Q4 underneath, the footnote at the very bottom with the numbers it gives scribbled into the relevant line items. Click to expand:
Ignore the footnote for a moment.
If you follow the orange and purple arrows from Q3 to Q4, you’ll see that without the restructuring deal, Morgan Stanley would have greeted the new year with enlarged peripheral exposures – with the total increasing from $2.1bn in the third quarter to $6.4bn in the fourth quarter. The exposure to Italy would have climbed from roughly $1.8bn to $4.9bn.
Hence it looks like it was with a certain sense of urgency that this “restructuring” was done. But again, because it only settled on January 3rd, it wasn’t arranged in time to bring down the quarter-end net exposure numbers.
Yet the fourth quarter results did get that pre-emptive revenue boost from the deal in terms of revenues. From the press release accompanying the results:
Fixed Income and Commodities sales and trading net losses of $257 million included the loss related to MBIA. Net revenues for the quarter also reflected strong results in interest rate and currency products,approximately $600 million related to the release of credit valuation adjustments upon the restructuring of certain derivative transactions representing exposure to the European Peripherals and the positive impact of $239 million related to DVA.2, 8
To put that in context, “Institutional Securities” — which includes the $600m net revenue from the restructuring deal — only had total net revenue of $2bn in Q4:
Hence 29% of the revenue was due to what is presumably a one-off restructuring in what was by all accounts an abysmal quarter compared to the previous one.
So, what was this restructuring? But before we even go there, what were these trades?
The Ultimate Tesoro Trader
As FT Alphaville has mentioned before, Italy (the sovereign nation, not its banks) has a lot of interest rate swaps with dealers. As rates have fallen, the dealers have found themselves in-the-money. In the normal course of business, the counterparty with the positive mark would receive collateral from the counterparty with the negative mark in order to guarantee performance.
However, sovereigns don’t typically post collateral. Consider it a hang up from the days of being considered the risk-free.
(Portugal and Ireland are notable exceptions and do post collateral, which might be why the net exposure to these two countries is as low as it is — note that Morgan Stanley defines “Net Counterparty Exposure” as “taking into consideration legally enforceable master netting agreements and collateral.”)
Back to Italian exposure though. As the sovereign’s credit spread has widened out…
… dealers have had to wipe out some of the positive mark (on interest rate swaps, for example) with “valuation adjustments”. As mentioned above, Morgan Stanley managed to reverse $600m of that with their mysterious restructuring.
Chris Whittall outlines the situation like so:
Many dealers have tried to persuade Italy to post collateral or restructure the trades, thereby reducing their credit and funding costs.The problem is Italy has a positive incentive not to post collateral or unwind these positions. Doing so would require Italy stumping up a large amount of cash, and that in turn would likely mean issuing more debt. Instead, the Italian Treasury may believe it is better off digging in its heels in and waiting for the swaps to roll off their books.
“We have talked to Italy and there is no happy ending to this story. Italy has a significant derivatives portfolio, and collateralising it would have a material impact on the public accounting. Italy has difficulty raising €5bn in a bond auction, and this funding would be more than that,” said the global head of rates at a major dealer.
Morgan Stanley refuses to talk about the spell it cast on Italy to get its Treasury to play ball, and frankly we’re not surprised. Unless this is a technicality that the bank cleverly built into its swaps, all the other banks will want some too, and it’s unlikely to be favourable to Italy to do whatever it did en masse (otherwise they already would have done it, right?).
More on how FT Alphaville and Mr Whittall thinks they did it in Part 2, below.

Morgan Stanley’s most mysterious footnote — Part 2


In Part 1, we looked in and around Morgan Stanley’s mysterious little footnote about how the bank had reduced net exposure to Italy from $4.9bn to $1.5bn with a restructuring that settled in the early days of 2012.
As the bank doesn’t want to give any additional detail on what the restructuring, the below outlines some of the possibilities and the implications thereof. We emphasise that we don’t know which is the case and, again, we did ask Morgan Stanley for comment.
1) Pixie dust, in the contract?
As sleuthed by IFR’s Chris Whittall:
Two senior traders at separate banks believed Morgan Stanley exercised a provision in its collateral agreement with Italy that allowed it to unwind a trade if its mark-to-market breached a certain level.
Traders said it most likely related to a legacy interest rate swap, which Italy had used to lock-in rates for 30 years at about 4-5% on around €3-4bn of debt. Thirty-year rates being now more like 2.5%, Italy would be significantly underwater on the trade, and would therefore have to pay up as much as €2bn to unwind it, the traders estimated. A major unwind or restructuring would also explain volatility at the long-end of the euro swaps curve late last year, they added.
Such break clauses are not very common, though. Hence we don’t expect that many will get to exit via this route, even if it turns out that Morgan Stanley was actually able to. Note again that the traders in the above quote are just speculating.
2) Pixie dust, by re-couponing?
Whittall again:
If there wasn’t a break clause, Morgan Stanley may have been able to persuade Italy to re-coupon the trade in a way that would reduce its exposure — an avenue other dealers are most likely investigating too.
This could be achieved without Italy having to make an upfront cash payment by shortening the tenor of the swap. However, it is debatable whether Italy would agree voluntarily to this, because doing so would bring forward its debt payments.
To this FT Alphaville would like to suggest a few additional possibilities.
3) Novation, aka give the trades to someone else
Our first thought when we saw the press release was that the Italy trades were novated, i.e. another party was found to take Morgan Stanley’s side of the trade in exchange for a fee.
Prime candidates would be Italian banks, as for them it’s similar to selling CDS protection on themselves, i.e. it’s very circular but what do they have to lose? If the sovereign finds itself on the verge of default, chances are the banks will have already gone down or would be nearing that point anyway.
The trick to that would be finding a novation where the price was right. Given the capital relief and face-saving from dumping the trades, we imagine the House of Stanley could eat a discount on the positive mark.
4) Get collateral
Another possibility is that the bank managed to convince the Italian Treasury to post collateral.
But what collateral would Morgan Stanley want?
Posting Italian treasuries would surely be comical, but hell, if it gets the capital requirement and net exposure down, why not? Ideally though, it’d be cold, hard, non-euro cash. And we guess the Italian Treasury would have to be hella desperate to do that, and somehow we doubt the Morgan Stanley relationship is a big enough deal to go to such lengths to save.
Between Italian treasuries and non-euro collateral, there are surely additional possibilities.
But here’s one option that we really doubt played a role.
Buying even more CDS (from non-peripheral banks)
Morgan Stanley may have done this between quarters, but it doesn’t look like it played a part in the restructuring that settled in January.
Solely for the purpose of explaining the results in the table sourced from the same disclosures as in Part 1, “Hedges” are defined as the “Fair value of hedges on net counterparty exposure and funded lending.” But note that there’s a “CDS Adjustment” that “represents the fair value of credit protection purchased from European peripheral banks on European peripheral sovereign and financial institution risk, or French banks on French sovereign and financial institution risk.”
In short, buying CDS protection on Italy from JP Morgan counts, whereas buying it from Unicredit doesn’t.
Between the third and fourth quarters, the fair value of Morgan Stanley’s Italy hedges (both non-sovereign and sovereign) actually went down, from $2.8bn to $1.4bn. This could be a function of the mark on the trades as well as the composition of the trades changing.
Concerning the restructuring here’s the impact that it had to the items to the left and right of the hedging column:
From the above it’s pretty clear that additional CDS hedging didn’t play a significant role in the restructuring.
What happens in Rome, stays in Rome
FT Alphaville is pretty sure that Morgan Stanley doesn’t want what they did to be anywhere near the light of day, what with all the stonewalling. Is that a good or a bad thing?
For investors, they should presumably be pretty happy with the bank for decreasing net exposure against Italy.
They should, however, be ready to question how they did it. There’s a world of difference between tearing up trades and sitting on dubious collateral.
From a regulatory perspective, does it matter whether there are increasing amounts of CDS protection sold being held by Italian banks?
From a policy perspective, is it not interesting to know whether the contracts did have break clauses that required a large payout by the Italian Tesoro? And if so how many more have them?
Answers on the back of a postcard. We’ll be watching out to see if any other banks pull off something similar.
(Massive H/T to Tracy Alloway for spotting the footnote, her coverage on Morgan Stanley’s results here.)

Vatican Church Towards Healing and Renewal


From the editor’s desk

Welcome change of approach

11 February 2012
http://www.thetablet.co.uk/article/162319

To describe the covering up of clerical abuse in the Church as equivalent to omertà – the code by which Mafia bosses enforce the secrecy of their own criminal actions – is to use language as strong as any employed by the Church’s critics over the last 10 years. The fact that it comes from Mgr Charles Scicluna, Promoter of Justice at the Congregation for the Doctrine of the Faith and the man with responsibility for dealing with the thousands of child-abuse cases reported to the Vatican, suggests that he and his colleagues have fully grasped the extent of the evil that infected the Church over this matter. Mafia bosses are, above all, interested in self-protection; they flee from justice. The failure of the Church in the past to ensure justice for the victims of child abuse has emerged as no less of a scandal than the abuse itself, made worse when it was the result of actions by persons in authority. It was a crime in canon law to show malicious or fraudulent negligence in the exercise of one’s duty, Mgr Scicluna said, indicating that bishops could be deposed from their sees for falling down in their duty in this respect.

He was speaking in Rome at the end of an international symposium, entitled “Towards Healing and Renewal”, sponsored by the Pontifical Gregorian University and attended by more than 100 bishops and 30 religious superiors. One abuse survivor who spoke called for bishops to be stripped of their posts if they failed to protect children from predatory paedophile priests. There are still notorious cases of high-level Church officials who have never faced justice for their errors of neglect. 

The holding of the symposium, and the seriousness with which people such as Cardinal William Levada, prefect of the Congregation for the Doctrine of the Faith, treated it, suggests that this department of the Vatican at least has caught up with the expectations of clergy and laity worldwide. They have at times been exasperated by the apparent inability of the official Church to grasp the enormity of the crisis. There were glimpses, nevertheless, of problems still unresolved. For instance, an American priest psychologist who has dealt with clerical child abusers said the organisational structure of the Church was skewed in favour of offenders, who were more likely to be believed by their bishops than those complaining of abuse. But there may be an even deeper problem – the “invisibility of the victim” in a system that concentrates on the sin of the perpetrator, as if that were the more urgent issue. 

It was emphasised in the course of the symposium that the needs of victims should be the Church’s first priority. But that is hard to square with the experience of an abuse survivor who seeks compensation in the courts, and finds the Church’s lawyers hiding behind every legal nicety. A fulsome and sincere apology, such as that issued by Archbishop Bernard Longley of Birmingham after a criminal case this week, is of far more use to a victim than a legal wrangle. Overall, however, the fact of this symposium and the frankness with which it was conducted – despite the unnecessary exclusion of the press from its proceedings – represents a big step forward. It is not just victims who need healing, but the Church itself.

EURO-chaos: Firefighters Hose Police in Brussels

What if Greece get a new drachma ?

What if Greece had to get a new currency?


Man burning 50 euro notes (actually photocopied notes)Hostility towards the euro itself has grown in Greece over the past two years as the austerity measures have dragged on
Although the immediate threat of Greece defaulting on its debt looks to have been averted, it still faces years of economic crisis as it struggles to bring down its debt. Support is growing within the country for a return to the drachma and some European leaders have said the euro could survive a Greek exit. So, Radio 4's Chris Bowlby asks, what would happen if Greece had to get a new currency?
The eurozone crisis is not just about political deals or high finance. It is also about confidence in the cash in people's pockets.
The euro was meant to symbolise a more united and stable continent for every eurozone citizen.
But if the single currency begins to fragment, if a country or countries reintroduce national currencies, everyone in the eurozone could be affected.
Haggling has continued over the terms of the latest Greek bailout, while political tension rises in Greece itself.
And as austerity bites deeper, few believe the overall crisis will be solved soon.
Plan B?
So there has been a very different, private policy conversation recently, full of angst, about what might happen if the eurozone cannot stay together.
Currency designer working on banknote designDesigning and printing a new currency would take about four months
"I've spoken to people about this in chancelleries and in parlours of power across Europe," says David Marsh, who has written a history of the euro, co-chairs a central banking think tank and stays in close contact with the euro's key players.
"I am convinced that there is a Plan B - people have told me that there is one," he adds. "But I don't know what it is and there's no reason why anybody should even think about making it open. It has got to be locked in a safe."
The reason for this secrecy?
Because when it comes to money, to the cash in people's pockets and bank accounts, then psychology lurks, and panic is always possible.
In Greece, there has already been a "slow run on the banks", reports political scientist Aristotle Kallis, as people take cash out of their accounts or send it abroad.
"They still feel that something will go horribly wrong - either Greece is going to move out of the euro or be kicked out of the euro."
And then, they fear, "there's going to be a devaluation of the new currency and all this money will be converted automatically to the new currency".
New currency
A government planning to leave the euro is likely to put in a discreet but urgent call to one of the top international currency printers - like the UK-based firm De La Rue.
It prints everything from the UK's pound sterling to the newest version of the currency in Iraq, the dinar.
Greek Prime Minister Lucas PapademosLeaders like the Greek prime minister may not talk about a Plan B, but many are convinced there is one
The company will not comment on any plans it may have for Europe, but is clearly ready should opportunity arise.
So how long does it take to plan and introduce new notes and coins?
"I don't think you could do it much faster than four months," says Mark Crickett, one of De La Rue's consultants.
But a government could not commission and take delivery of a new currency without word leaking out and panic spreading.
It is much more likely that a withdrawal for the euro would be announced suddenly, and then there would be an interim period - those four months, say - during which a temporary national currency would be used.
Euro notes previously in circulation in a withdrawing country might be overprinted, or have special stickers added.
Rapid devaluation
But how would, say, Greek citizens react to the prospect of their euro cash being overprinted into rapidly devaluing new drachmas?

Find out more

Lego shark eating lego men holding Greek, Italian, Portuguese and Spanish flags, on a floor of euro coins
  • Listen to Analysis on BBC Radio 4 on Monday 13 February at 20:30 GMT
Although the initial official exchange rate might be, say, one new drachma to one euro, economists expect a rapid devaluation of the new currency of 50% or more.
As capital controls within Greece would be likely to restrict Greeks' ability to convert euros to new currency at the devalued rate, those who have already been stockpiling old euros under their mattresses would probably head for the border.
In this kind of situation, says Mark Crickett, governments are left doing things like "sealing borders… to try to prevent the movement of currency".
And that interruption to the free movement of goods and people could call into question a country's membership of the European Union itself.
Any such action by one government would also prompt panic in other weaker eurozone countries, as citizens assumed their governments might follow suit.
Larry Hatheway, chief strategist of the UBS investment bank, has co-written one of the most extensive studies of what a eurozone break-up would mean.
"Imagine," he says, "that you are a Portuguese citizen, and someone walks into your office one day and says "Gee, did you hear the news? Greece just left the eurozone?"
"The logical response, it seems to me, would be to seriously consider whether to continue to keep your wealth, your assets, your money… in Portugal."
The 'unthinkable'
The political leaders' Plan B, some kind of firewall of finance and political commitment to prevent so-called contagion, should then emerge.
But could it counter the popular mood?
Attitudes to money across the eurozone could change radically after what Mr Hatheway calls "the unthinkable has happened".
Greek newspapers on saleHow would the Greek public deal with the prospect of reverting to the drachma?
There would be many thousands of people trying to move euros across borders and trade them against rapidly depreciating new national currencies.
One very well-informed source told us the authorities in Germany were even discussing the possibility of the whole euro currency having to be redesigned and replaced if it was compromised by irregular trade.
And a prominent German newspaper, the Frankfurter Allgemeine Sonntagszeitung, has been recalling the Cold War when the Bundesbank kept an entire spare run of the West German currency, the D-mark, in storage - in case East Germany or the Soviet Union managed to compromise the circulating money with forgeries.
If the eurozone cannot hold together, the continent's cash may be about to return to a similar period of uncertainty, as people feel in their pockets the consequences of the politicians' failure.
You can listen to Chris Bowlby's full Analysis programme about the future of the euro on Monday 13 February at 20:30 GMT and again on Sunday 19 February at 21:30. You can also listen on the BBC Radio 4 website, and download the podcast.