The end of EMU: legal ramifications

So how can EMU end? Let us say that, for whatever reason or reasons, Germany wished to leave EMU. How could it be done?

Germany could introduce a new currency, and declare it to be the only legal tender within German jurisdiction. To encourage the use of new currency, Germany might make taxes payable in the new currency, and might make the new currency mandatory for certain forms of contract. This new currency would be entirely under the control of the German authorities, and they might or might not choose to delegate this control in whole or in part to an independent central bank.

Alternatively, Germany could make a different currency legal tender, perhaps the dollar or the pound or the Swiss franc. For the purposes of this exposition the effect would be similar.

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See also: Why the time has come to suspend the euro
By Meghnad Desai, Daily Telegraph, November 8, 2000

See also: Weak euro reflects uncertainty of euro-zone
Wolfgang Munchau, Financial Times, November 6, 2000

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