Diritto Amministrativo e Appalti - Bancario e Finanziario

The legal debate concerning a Euro Split

Over the past few years American economists have increasingly advocated that the economically weaker countries should leave the Eurozone creating a “flexible euro”. The discussion has then concentrated on whether this approach would address or fix the increasing economic divergence between the growing and receding economies of the Eurozone without jeopardizing the existence of the monetary union. The flexible Euro proposal constitutes a compromise between a full European fiscal integration and a full break-up.

According to this proposal, different countries (or groups of countries) would have their own euro whose value would fluctuate within a range affected by Eurozone policies. This solution would preserve a minimal currency union and at the same time allow weaker economies to devalue. Since the devaluation range would be approved by unanimous consent, many believe that it would not cause any formal exit from the single currency.

What would be the consequences of an outright Euro exit? And is an outright exit possible at all under current EU legislation? The problem exists because the provisions of the EU treaties consider the monetary union irreversible and do not contemplate procedures for a voluntary or mandatory Eurozone exit. Despite this apparently insurmountable impediment, the possibility of expulsion from the Euro seems to be generally accepted.

Many argue that the other exit options are not included in the relevant treaties and therefore require either new explicit provisions to that effect or an unanimous decision by the European Council with the consent of the European Parliament. Some commentators support instead a treaty amendment, a European Council decision or an exit and subsequent rejoining of the Eurozone on different terms upon achieving economic convergence.

What is the position of European authorities? The ECB has stated that exit is not  simply allowed under the treaties; the European Council considers that the irrevocability of membership in the euro area is an integral part of the Treaty framework; and the European Commission that, as a guardian of the EU Treaties, it intends to fully respect that irrevocability, adding that it does not expect to propose any amendment to the relevant Treaties. At first glance, these positions seem to leave very little margin for withdrawal or break-up as a alternative to the flexible Euro.

According to some commentators, however, the provisions adopted by the United Kingdom to implement its exit from the European Union could be invoked as a justification by analogy for leaving the Eurozone: it would make no sense, they argue, that a Member State would be allowed to leave the EU outright, but not just the Eurozone. In addition, Article 139 of the Treaty on the Functioning of the European Union (TFEU) could be interpreted as allowing the European Council to “withdraw” its earlier decision that a specific Member State fulfills the necessary conditions for entering the Eurozone, on the ground that a given competence to decide on a matter includes the power to retract that decision. This right to leave could also be based on the “flexibility clause” of article 352 TFEU, which grants the Council the power to adopt appropriate measures to ascertain that staying in the Eurozone would be devastating for the people of such Member State and the rest of Europe.

This article does not attempt to address the practical steps to be taken to achieve a flexible Euro or the market speculation that would be a key background factor in the elaboration of such plans. The point is that if there is a need there is probably a legal basis in existing EU law on which that need could be addressed.


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