A Greek Exit? Eurozone May Be Ready, Are You?

May 23, 2012

Over the last few months, the focus of discussion on the Euro crisis has shifted from “what can be done to keep Greece in the Eurozone?” to “what do I need to do if Greece leaves?”  This shift reflects both the growing understanding of the issue and the domino effect the event could have—from global economic effects to disruptions to local policy and changes in the daily workflows of asset managers.

Recent coverage on this issue has addressed many of these anticipated impacts. While everyone is hoping for the best for Greece, the reality is that policy makers and Euro banking leaders have been planning for the worst-case scenario; they simply have to.

The take away from these articles and dozens of others like them?  While no one knows what will happen with Greece, the Euro or the economy as a whole, we can and should be educating ourselves and taking steps to prepare for change.  Global economics notwithstanding, if Greece leaves the Eurozone, there are numerous potential impacts on each of us that vary based on our location, roles and organizations.  And in the event of it happening, we are united in wanting it to minimize the disruption to our companies and most importantly to our clients.  For PORTIA, our goal is to make sure our global client base can manage a Euro change with little impact to operations and service to their end clients.   Practical issues range from handling a change to base currency and all related downstream effects, such as changes in reporting and performance measurement.  But beyond those specific practical implications, there’s a larger lesson, one that we work hard to keep top of mind—the importance of anticipating and preparing for change, and ensuring that our systems provide the flexibility that clients need to adapt, in order to remain strong and differentiate themselves in highly competitive markets.

Is the Greek exit imminent? Will Spain, Italy and Ireland follow?  What will happen to the Euro in general?  While only time will reveal the answers to those questions, the best we all can do is be prepared.

 – Claudine Martin, Product Marketing

Related Reading:

  1. A few months ago, a PORTIA blog post discussed how PORTIA clients can handle the redenomination of a currency leaving the Eurozone. 
  2. In The Economist, “The Greek Run” talks about what they call the “GREXIT” and what Greece, the European Central Banks and European policy makers should be doing leading up to the June 17th election and the outcome it may bring. 
  3. In the New York Times last week, the article “A Greek Exit, Eurozone May Be Ready” discusses the steps the European Currency Union is taking to minimize the impact of a Greek departure and how the US has been reducing their risk and exposure in Greece and other “troubled countries.” 
  4. Mondaq  walks through  “The Euro Crisis: Risk Planning for Asset Managers”  (free registration required to read entire article) by describing issues that asset managers should be considering from portfolio decisions and cash deposits to contractual rights on defaults and enforcement.

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