On 1 January 2012, many of us brought in the New Year with a celebratory glass of champagne, just as the Europeans did 10 years ago when their drinks were paid for in shiny new Euros. Minted and printed for the first time amid considerable excitement and optimism, the currency issued in twelve member states of the European Union, formed the basis of the Economic and Monetary Union (“EMU”) that we commonly refer to as the single currency. Ten years on, however, and the single currency is in crisis. The spectre of sovereign default looms threateningly over the financial markets, while a burdensome combination of ratings downgrades, record-breaking borrowing costs and social unrest, all point towards increasing instability and the very real possibility of either the fragmentation or complete dissolution of the single currency.

For the purpose of this briefing, we have concentrated on two possible scenarios – the withdrawal by one or more member states (“Departing Member State” or “DMS”) from the EMU and subsequent redenomination of the Departing Member State’s national currency (a “fragmentation”), or the complete dissolution of the single currency of the Eurozone (“dissolution”).