Eurozone Bulletin: Updating Contingency Plans

The eurozone crisis is still very much with us, and the volume and scope of questions continue to expand..  In our updated Eurozone Bulletin you will find:

(i)    An overview of the key risks to consider in relation to a potential eurozone exit

(ii)   Analysis of additional legal issues, including the settlement of transactions (through the       TARGET2 settlement system), which could prove crucial in determining who bears losses       arising from transactions that are in process at the time of an exit from the eurozone

(iii)  Reference to the possibility of capital and/or foreign exchange controls

Key questions answered include:

  • What are the possible outcomes of the eurozone crisis?
  • How could Greece exit the eurozone?
  • How would a eurozone exit occur?
  • Can a state change its currency overnight?
  • What happens to euro denominated accounts and contracts after an exit?
  • In the event of a Greek exit, would euro denominated contracts with a connection to Greece continue to be valid and binding?
  • What is the continuity of contracts principle?
  • How do you determine redenomination risk?
  • What should I be more concerned about – redenomination risk or capital and foreign exchange controls?
  • What is the principle of lex monetae?
  • When would the redenomination of euro obligations occur and at what rate?
  • Would additional terms need to be implied into a redenominated contract?
  • Would the unilateral exit of Greece from the eurozone impact the redenomination risk analysis?
  • How would TARGET2 be affected?
  • How would enforcement of judgments be impacted?
  • What key risks should I consider following a eurozone exit by Greece?
  • How might I be exposed?
  • How can I manage my risk of exposure?

For further information please contact your regular Linklaters contact or click here for a list of Linklaters lawyers in various jurisdictions who will be able to help with your Eurozone-related queries.