The future of the European single currency stands precariously balanced. While hoping for the best outcome, prudent financial planning requires businesses to at least consider once unthinkable thoughts about the possible withdrawal of one or more member states from the single currency or even its demise altogether. This possibility has recently become more than just fanciful, since the recent failed election of the new Greek government has called into question Greece’s willingness and ability to adhere to the significant policy reforms and austerity measures required as conditions to the second bail-out1. Should Greece fail to install a government in the forthcoming re-election which will adhere to these measures, European authorities may refuse to pay the next bail-out payment, which in turn may result in Greece’s accelerated exit from the single currency.

This update provides some background regarding the stringent bail-out conditions which Greece has been required to implement and the potential impact this may have on the future of the single currency.