Das passiert, wenn Deutschland den Euro abschafft

Attention, now comes a question that will make you realize if you are slowly getting older. Do you still remember what you were doing on January 1, 2002? If so, maybe you are like us. The first gray hairs are already appearing in the beard and on the head. If not, I can congratulate you, you are still quite young. Maybe you weren't born yet at that time. But you're as old as you feel. I can tell you what I did on January 1, 2002. That day, as soon as I got up, I rode my bicycle to the nearest ATM. There I unpacked my card, put it in the machine and took out 20

euro

s in cash.

Okay, incredibly exciting story, I know. But back then it was really something special. Because on January 1, 2002, the

euro

was introduced as cash. And the two ten dollar bills I received were the first euro bills I had ever held in my hand – exciting. Today, of course, the tension is over. Not only that: not everyone in Germany and the European Union is as enthusiastic about the euro as I was on January 1, 2002. Some blame it for the current high inflation rate. Should Germany then abandon the euro? This is a question that has been debated again and again for many years.

But to properly answer this question, we first need to clarify something else. What would happen if Germany no longer had the euro, but the German mark, the German mark? That's exactly what it's about now. (Dynamic music) The euro: at first glance, something very practical. You have a currency with which you can pay in a total of 20 countries in the European Union. The same applies to transfers for orders outside the EU. Without complicated conversions, you'll immediately know how much each product costs. However, everything becomes more complicated when paying outside the so-called Eurozone. That means outside the EU, but also within the European Union.

Eight EU countries had not yet introduced the euro until recently. For example Croatia. This is exactly where you will be able to pay with euros from January 1, 2023. Others gradually follow. Except Denmark, which has special rights in this regard. The euro is now exactly 21 years old in cash transactions. The results so far are completely different, depending on who you ask. Some talk of a great success that would be good for economic stability throughout Europe. Others say no, especially for us in Germany the euro has more disadvantages than advantages. In any case, the population is doing quite well with the euro.

According to current figures from the Eurobarometer, which is an EU-wide survey regularly commissioned by the European Commission, around two-thirds of all respondents in the EU say: We are satisfied with the euro. A third are not satisfied. So the image of the euro is good. However, there are always people who want to abolish it as currency in Germany. In Germany, for example, the AfD party, Alternative for Germany. In the electoral program for the 2021 federal elections, the AfD wrote, among other things, this about the euro: The AfD wants to leave the euro, which places it alone among the major parties in Germany.

Only the FDP addressed the issue in its 2021 election program in an at least somewhat similar direction and called for a legal option for euro countries to leave the euro. But not specifically in relation to Germany. This brings us to a central problem when it comes to exiting the euro. Because in reality there is no legal provision for such an exit. European treaties stipulate that an EU member must introduce the euro in the long term. However, they do not contain an exit option. The idea is that only if everyone commits to the euro in the long term can it remain stable.

However, there are still options. The simplest and at the same time the most important is for a country to leave the EU. Then it will more or less automatically exit the euro. That was not the case in Britain, because Britain did not have the euro at all. But leaving the European Union directly would be a very violent step. So the question is: is there another way? In principle yes, writes lawyer Hans-Detlef Horn from the Philipps University of Marburg. Three years ago, on behalf of the Group of European Conservatives and Reformists in the European Parliament, he prepared a report that concluded: Other experts see the same thing.

The thesis is that the absence of an option in contracts does not automatically mean that it does not work at all. And that is exactly what we now assume for our scenario of a possible German exit from the euro. More precisely: for the scenarios. Because we're about to talk about a potentially bad and possibly good course of events. But before we do that, we first have to clarify something very fundamental. That is to say: said in such a relaxed way, it sounds very simple. Germany is no longer interested in the euro, tells the other eurozone countries so and then withdraws.

In reality, of course, it is much more complex. One possibility would be a disorderly exit. This would roughly mean that the German government decides that we want to reintroduce the German mark, the German mark, without consulting or exchanging ideas with our European partners. You just say, we'll do what you think about it, we don't care. The government could then organize a two-thirds majority and then initiate the corresponding constitutional amendment. Two-thirds majority in this parliamentary case. However, this is not so easy and could encounter resistance from the population. This means that in order to place the exit from the euro on a broader and, above all, democratic basis, a referendum at the national level would make sense.

But that is currently not possible this way. You can find more information about this in the video here at the top of the "i". Therefore, before the government could address exiting the euro, it would have to introduce the referendum at the federal level. That's a long way. When that happens, probably after many years, things would be more or less like this in case of a disorderly exit. Germany creates facts. Money is produced for a national currency and also distributed directly. In the background, change is being prepared for the financial markets. Then Germany introduces its own currency: the German mark.

Euro countries have no choice but to accept this. If they rejected the new currency, the economy would collapse. That is why the German mark is accepted and, after some back and forth, is considered the only means of payment in Germany and is accepted abroad. Chaos would be inevitable. Also because, at the latest after the referendum, many people would react to the end of the euro in Germany. Financial markets could get quite confused. It would be different with an orderly exit. Also in this case, in the best of cases, a referendum would be held with a two-thirds majority to democratically legitimize the step.

Representatives from Germany and the EU would then meet to discuss the matter. Similar to what happened with Brexit. After long, probably very, very tough negotiations, there is a result. A transitional period is agreed during which both the euro and the German mark will apply. The social economist Gerd Grözinger, for example, describes it with the example of an exit from France. The German mark will officially become a means of payment in Germany on a certain date, but the euro will also remain valid for the time being. So it's kind of a hybrid. The conversion is initially done on a one-to-one basis and then based on economic development.

All of this is carried out under the supervision of the European Central Bank, ECB, which is still based in Frankfurt. After five years everything is finished. Germany has the German mark, the rest of the eurozone still has the euro. And everything is fine so far. At least in theory. In practice, the entire system could collapse, including the European Union. This brings us to scenario number one: an exit from the euro by the economically strongest country could have a really negative signaling effect. If Germany is left out, then so can we, other countries might think. It worked for them and it worked for us too.

There could be a chain reaction in which more and more countries leave the eurozone. Until there was almost nothing left. The result would be chaos. And this is especially true when many countries want to leave the euro at the same time. That would also greatly damage the European Union. In the end everything could collapse. That would be the worst case scenario. But even in a more moderate scenario many problems could arise. Let's assume the following: after five years, the German mark will be the only means of payment in Germany. And she looks very good. The ratio between the German mark and the euro is now one to 1.4.

This means that for one German mark you will get 1.40 euros. Initially, this is a good thing for the population. If you buy from abroad in the EU, you will get much more for your money. At the same time, there is also a crucial disadvantage. If you have invested money outside of Germany, its value in German marks is much lower. At least if it were in another EU country. And German companies also have a problem. Their products are more expensive. Also in one of the most important sectors of the economy: the automobile industry. Fewer and fewer people abroad want to buy German cars because they are very expensive.

Things are not looking better in other areas either. Many people simply can no longer afford “Made in Germany” and prefer to look for alternatives abroad. For companies it is very clear: prices have to go down. To achieve this, many people move their production abroad. Additionally, salaries will be frozen and set lower for new hires. This worsens the shortage of skilled workers. More and more qualified people are leaving. This has dramatic consequences for the German economy. Many qualified positions can no longer be filled. There are difficulties and failures in delivery. At the same time, sales figures are falling and exports are declining.

The unemployment rate is rising because simpler jobs are now being done abroad. This, in turn, also affects public budgets. As many companies make fewer profits, tax revenues are declining. More and more municipalities lack money to renovate streets or schools. One radical austerity measure follows the next. Social spending must also be cut, which in turn especially affects the poorest sectors of the population. At the same time, the German financial market is faltering. Frankfurt is being replaced as Europe's financial center. Many important players are leaving, including the ECB. Flexible exchange rates make long-term planning difficult. The German Bundesbank has to intervene again and again to regulate things.

Hedging the currency is very costly in the long run. Germany's image has also been affected. The country is seen as an unreliable and increasingly avoided partner inside and outside the European Union. Eastern European countries, in particular, are increasingly turning towards China and abandoning cooperation with Germany. And that, in turn, faces a deep economic recession and enormous social unrest. The difference between the poorest and the richest is increasing. But things could also be different. So now scenario number two: also in this scenario Germany starts with a strong deutsche mark. In this case too, German products become more expensive abroad, among other things.

In fact. At the same time, companies can import raw materials and other elements necessary for their products from abroad for less money. This in turn is reflected in the price. Things are getting cheaper. The conclusion is that exports would not be much more expensive. And the German population is eager to buy. The strong German brand makes many products cheaper, including cars. This partially compensates for the lack of sales abroad. However, there are not so many losses. Because Germany is leaving the euro zone, the economy of the remaining euro countries benefits. In Italy, Spain and France, for example, gross domestic product increases by two percentage points.

At the same time, exports increase by four percent. Countries are doing much better. And they can afford the somewhat more expensive “Made in Germany” products without major problems. And not only that, in this scenario there is not an inflation rate as high as what we are currently experiencing throughout the euro area. Because while the ECB, the European Central Bank, is currently in control of the key interest rate and how the economy is doing, more on that in this video here, if the German mark is reintroduced, this can be regulated at the national level. by Deutsche Federal Bank.

This means that Germans can ultimately buy more with their money. And public budgets also benefit. Not only because of the continued high revenues from taxes and other duties, but also because of the fact that Germany no longer participates financially in the euro stabilization and bailout operations.it should participate. Like ten years ago, when Greece stumbled. Germany saves between 10 and 20 billion euros annually and can invest that money in its own country. In five years, Germany will be in a better position than before. With astable currency, a well-functioning economy and more sovereignty through the German mark. That almost sounds too good to be true, right?

Yes, actually that's how it is. This particular second scenario contains a lot of assumptions that are quite vague. Many things have to work optimally so that Germany's exports do not collapse in a very short time. At the same time, there must be a consensus within the eurozone that it is completely fine for Germany to leave the group. Simply put, everyone should want the best for Germany and actively support the exit. The example of Great Britain and Brexit shows that this is quite unlikely. You don't want to make it attractive to leave the European Union or the eurozone, otherwise others might follow your example if you say it's a good deal and we want it too.

If Germany abolishes the euro, it will be a completely new situation and no one knows what it will bring. This could also cause panic. It is quite possible that many Germans will withdraw their money and exchange it, for example, for US dollars or Swiss francs. Of course, it doesn't have to be like scenario number one. But most experts are sure that abandoning the euro would initially shake Germany deeply. After that, everything may go pretty well, but it doesn't have to. The risk would be very high. And the AfD also admits it. In his election program he writes: The crucial question is: How high will these charges be?

And that's exactly what no one can predict with certainty at the moment. How do you see that? Are you fundamentally in favor of Germany reintroducing the German mark? Or do you prefer the euro? Feel free to write it in the comments below. Here at my side you will find a video about why many things are becoming more expensive these days and why the inflation rate is so high. And just below there is a video from the channel “MrWissen2go Geschichte” about the history of the European Union. Thanks for watching. See you next time.