Balance sheets after the EMU: an assessment of the redenomination risk

Cédric Durand and Sébastien Villemot

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: The probability of a partial or complete break-up of the euro has risen over the last years. Such an event could create a balance sheet problem for economic agents, if the redenomination process introduced significant currency mismatches between the asset and liability sides. We propose a new assessment of this redenomination risk, by country and by main institutional sector, for two scenarios: a single country exit and a complete break-up. Our main conclusion is that, even though the problem has to be taken seriously, its order of magnitude should not be exaggerated. Only a few sectors are at significant risk: public debts of Greece and Portugal, financial sectors of Greece, Ireland and Luxembourg. In particular, the balance sheet exposure of the non-financial private sector to the redenomination risk appears to be limited.

Keywords: Accounting; International economic order (search for similar items in EconPapers)
Date: 2020
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03409079v1
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Published in Socio-Economic Review, 2020, 18 (2), pp.367-394. ⟨10.1093/ser/mwy004⟩

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Related works:
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2020)
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2020)
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2016)
Working Paper: Balance Sheets after the EMU: an Assessment of the Redenomination Risk (2016)
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2016)
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2016)
Working Paper: Balance Sheets after the EMU: an Assessment of the Redenomination Risk (2016)
Working Paper: Balance sheets after the EMU: an assessment of the redenomination risk (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-03409079

DOI: 10.1093/ser/mwy004

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