News

Plans were drawn up for collapse of euro

GOVERNMENT contingency plans to replace the euro amid fears that the single currency would collapse are revealed today.

The Sunday Independent has learned that detailed measures were drawn up by Central Bank officials as fears of a break-up of the euro mounted in late 2011 and early 2012, despite a raft of official denials at the time.

The plans, devised under utmost secrecy, were deemed necessary to examine “all possible scenarios should the euro cease to exist”.

Four separate sources have confirmed to the Sunday Independent that secret plans were developed to address the “increased likelihood” of a break-up of the currency between mid-2011 and August 2012, at the height of the continent-wide crisis.

As European leaders fretted about the possible exit of Greece from the euro and the knock-on effects on other countries, officials here met to discuss what they should do in the event of a complete melt-down of the currency.

In the summer of 2011, two teams of up to five officials from the Central Bank and the Department of Finance’s banking division, headed by official Ann Nolan, worked together on “scenario testing” as to how Ireland could deal with a break-up of the single currency.

One source told this newspaper: “The euro would have to be replaced with something and what currency and how it could be floated would have been examined.”

Amid growing fears about the stability of Spain, the “war room” was set up to examine what “legal, logistical, financial and economic obstacles” would have to be overcome.

According to sources, the Finance Minister Michael Noonan and the Central Bank governor Patrick Honohan were central to the plans.

Sources said it was “unlikely” that the Department of An Taoiseach was involved in any meaningful way, but it may have been informed that “contingency plans of some form” were under consideration.

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