Banks prepare to deal in pre-euro currencies if EU collapses

26 Dec 2011

1

As the euro-zone debt crisis deepened in recent months, at least two global banks have prepared to install back-up technology systems that would allow trading in old European currencies like the Greek drachmas, Portugese escudos and the Italian lire.

The banks, though, found themselves in something of a bind with the financial world putting on a brave front as it tried to shore up the stock of the euro and also a contingency plan to address the implications of its possible scrapping.

Technology managers at the banks got in touch with Swift, the Belgium-based consortium managing the network used in financial transactions, according to people familiar with the matter.

The banks wanted Swift's technology support and the currency codes that would be necessary to set up the back up systems.

However, Swift declined to offer certain information for such contingency planning, that pertained to old codes and whether they would be supported on the system, according to people familiar with the matter.  

That is in part due to fears that releasing the information could trigger fresh doubts and instability in the euro zone, these people said. 

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