Tags: Mobius | Countries | Leaving | Eurozone

Mobius: Countries Leaving Eurozone Makes No Sense

Tuesday, 20 Mar 2012 02:43 PM

Countries like Greece and Portugal will work through the European debt crisis and stick with the euro, as abandoning the currency zone does more harm and than good, says Mark Mobius, executive chairman of Templeton Emerging Markets Group.

Greece recently restructured its debts with private creditors and gained access to a $172 billion bailout fund, although many experts say the move stops the bleeding, adding that until the country improves its economic fundamentals, sovereign default concerns will return.

Some say the country will abandon the currency altogether, as a cheaper monetary unit would make its exports more competitive.

The problem with such a move is that it would rattle the global economy and the benefits don't come overnight.

Plus fundamental economic problems remain.

"Moving into another currency does not solve any problems; in fact it’s running away from problems without heading to the root of what’s wrong," Mobius writes in a question-and-answer report with his readers and investors.

"That’s why I’m baffled when people say a particular country should leave the eurozone."

Markets remain on edge despite Greece's recent bailout.

The country still faces a daunting tasks of trimming its bloated public sector and cutting spending amid a recession, austerity requirements attached to the bailout.

"Officials remain concerned about the ability of Athens to politically deliver on the tough economic-overhaul policies, especially considering that the forthcoming elections in Athens may mean new leaders aren't as committed to reforms," says Stan Shamu, market analyst with IG Markets in Melbourne, Australia, according to the Associated Press.

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Tuesday, 20 Mar 2012 02:43 PM
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