Icap stress tests for euro exit of all 17 eurozone currencies
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Foreign Exchange

Icap stress tests for euro exit of all 17 eurozone currencies

Icap, the world’s largest inter-dealer broker, has tested its systems for the break-up of the single currency.

The broker, which caused a stir in November when it said it had stress tested for the exit of the drachma from the currency union, said on Wednesday it had completed tests for all 17 of the legacy currencies that would emerge should the euro be disbanded. The death of the euro has the potential to wreak havoc on the markets on a scale that would dwarf the turmoil that followed the collapse of Lehman Brothers.

However, David Rutter, Icap chief executive, said the tests did not reflect any specific concerns over the viability of the euro.

“We want to be ready for any outcome, and that includes the exit of one or more currencies from the euro,” he says.

“We have now tested our systems against all legacy currencies and are prepared for the break-up of the euro.”

Rutter added that the euro was likely to prove larger than the sum of its parts in the event of a break-up, with trading volumes in the 17 legacy currencies unlikely to match those in the euro.

“It might not seem like it at the moment, but the euro is still an important reserve currency,” he says.

“I worry that if there is a break-up, total volumes in the 17 currencies won’t be as large as those in the euro.”

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