Europen Chaos

The storyline these days in Europe esp PIGS is about exchange control and bank runs which are very difficult to deal with. When your citizens is afraid of exchange control and started pulling money out of banks, then even central bank has a severe problem on hand. No banks can withstand continued withdrawals by her depositors esp ECB is not a lender of last resort.

Imagine the final days before South Vietnam was about to fall and people pulling money out from the banks, there is no way to stop it other than exchange control and imposition of withdrawal limits.

Once such controls are imposed, there could be contagion spreading to other countries in similar dire situations.

This is a very plausible outcome when politicians are still dilly dallying about what to do when what they have in mind is all about votes. It would take something of a crisis proportion to push them into action.

Greece exiting EU might be a better option serving as a negative example of a very bad outcome after exiting EU to other PIGS countries.