Hi,
I’m relatively new to trading, but just out of general curiosity; I’m just wondering what the ‘procedure’ in forex is if a currency eventually gets removed from usage? Primarily with positions for open trades; are they instantly closed as soon as it’s announced or what?
Buy the mark, sell the French franc, Greek drachma, Spanish peso, and Italian lira.
If the euro goes away, there will be a lot more pair choices after the volatility.
Other than that, it would be business as usual, the original USD index would be back.
Since divorces are far more painful than marriages, the political fallout in the EZ would be rather troublesome.
Germany, and France would want to know how they get recouped for the bailout monies spent on the PIIGS. The IMF would be in trouble, and asking for more from it’s biggest single donor, the US, and the US banking system would be way under capitalized again, because of EZ exposure.
The equities markets around the world would likely tank, as would paper trades on metals. But the price of physical metals would likely decouple from margined paper trades, and rise dramatically.
In short, it would be like '08 all over again. Maybe worse.
There would be enough heads up I’m sure. They can kick the can a bit more.
As it gets worse, maybe transitioning away from all things euro into the less endangered pairs would be prudent.
It won’t happen overnight, but there is enough chatter about the possible demise of the EMU that it does warrant some attention.
Interesting also the biggest debt payment is due this month(January) of 500 billion,since the crisis began!If Euro survives it will be on Germanys back.
In terms of withdrawing a currency in a managed way, what happens is the replacement currencies are introduced and trading mechanics set up for them to trade alongside the current currencies. With a rate established people could decide to take auto-close on last day of old currency or to have a position transferred into the new currency - this is theory. The reality is moving positions over automatically would cause crazy spikes as new long and short positions at various volumes came online. Same problem if you moved all positions across then turned the system on. So all positions in old currency would be closed by traders or auto-closed by brokers/exchanges at set date. With access at the retail level to the new currencies allowed at some later date. Big institutions and banks would already be backing the new currencies during the hand over phase.
HOWEVER it would be catastrophe within and amongst the markets and its actors (traders, brokers, exchanges, central banks) that would precede the failing of a currency not the other way around.
The euro has no chance of ceasing to exist if you kill all non-essential idle speculation. Just on fundamentals, without the most pernicious part of speculation (short selling) you could have 10 European defaults and solve the whole thing structurally with renegotiated terms, central banking strategies and national policy reforms - hell even a few foreign policy salvos. No hysteria, no fuss. And still keep the euro.
What you will find during a SUDDEN MELTDOWN which is basically what your wondering about is that brokers unable to find buyers and unable to hedge positions will close positions in quick succession or worse turn off trading leaving positions and monies open to risk. ALL STOPS WILL SLIP 100s of pips if they get filled at all (remember stops are not circuit breakers on servers, they become market orders when a price is hit) - many would be margin called. The larger issue is the brokers themselves would be caught out and this kind of meltdown considered in the euro would send all markets sideways forcing many brokers to take heavy losses closing open positions at severe loss, unable to find buyers or sellers at reasonable rates (brokers taking the other side or maintaining hedges for considerable volume). Worse underlying exchanges would suspend trading e.g gold (or perhaps just margin increases) and futures leaving brokers holding their @@@@s in their hands. Liquidity would dry up as stocks, currencies and bonds would be selling but not buying as the kind of problem that caused this
Meltdown would hit the G20 instantly for a while.
RATIONAL THINKING would return within a week or so but the fallout would take a while to fix.
Question is what kind of market news or action would cause a serious undermining of confidence in the euro to cause anyone breathing to pull out?
The fiber is still hovering 30% higher than the buck and in the last 10 years or so it was almost always higher, but nobody asked for a crash of the buck, even with trillions of debt. Now since two years there are some issues with the fiber as well and the whole world of retail traders is speculating about a fiber crash. My opinion? Yawn! 
It’s not just retailers. It’s making headlines.
You mean headlines for retailers?
Frankly I’ve read this utter nonsense 2 days ago or so anywhere else. Even if you would dream on the fiber would crash and substituted by something else, it would for sure not be an old currency like the DM or Drachme. Which shows the nonsense of such a hoax.
Yes, you’re right.
The WSJ is a trash organization, aimed at informing the uninformed retail crowd.
Lol. Where did I say that? However, you seem to believe in institutions and hearsay instead of simple logic. I do rather believe in simple logic than in institutions and hearsay. Made a lot of money already with that, so it can’t be that wrong, lol. Some propagate the fiber will collapse since years already, so it becomes a little boring to listen to that voice while its ranging between 1.20 and 1.50 around, lol. 
Buckscoder, your on point, that point of view in the article is garbage. I believe some countries will leave but the euro isn’t going anywhere - count on that.
The articles are designed to throw broad bracket fundamentalists doing buy and hold plays over months. Day traders should not be worrying about the global macro chitter chatter, it makes no difference to us.
Stick to observing the daily and sub-day trends or at the most 1-3 day trends for longer-term traders and react to those.
We’ve been over all of this with silver, gold and oil - the news is pure garbage - everything you need is in the charts and price.
But be clear - most of the news is NOT for traders but for investors. Traders don’t care what is being planned for 2020 nor do we care what will happen at the end of the trading week.
The same people who control the banks control the media. Simply go into YouTube and listen to coverage throughout 2007, 2008 and 2009 - no one has a damn clue and that’s official
Anyone who lived or visited or studied Europe before 2000 understands FUNDAMENTALLY why the euro currency will not disappear, worse case it will remain as the currencies for Germany, Spain, France, Netherlands and Ireland - worst case.
And if this happened, I bet london would follow to create a super trading bloc with new membership restricted to a resurgent Italy and of course switzerland.
But understand growth in developed countries is based on bringing new consumer markets online so all roads must consider this.
There’s no problem introducing a “new euro” for certain countries needing monetary flexibility as a short term solution pegged perhaps a 2000 or 5000 pips below the regular one.
You’d be surprised what Belgium, Germany and France will do to save not the euro but their own asses and economies.
Leave them to it and just watch your charts
Think my trades are based on fundamentals? Think again.
And no. I don’t believe any of the institutions, and hearsay. I don’t watch CNBC, Bloomberg, Reuters, or even read Barron’s, or the WSJ. I just happened to see that statement: “Banks Prepare For Life After The Euro”, because it was the actual front page headline on the printed version WSJ a few weeks back.
I also believe where there is smoke, there is likely a fire. And there has been an awful lot of smoke around the euro lately.
And, lastly, shockingly, I also use logic. Logic dictates that multiple sovereign economies cannot survive under one generic monetary ideal. There also has to be political union for one currency to be summarily viable in the EZ. And the EZ is decidedly not ready for political union.
So the euro experiment will fail. It may, or may not happen overnight. But it WILL happen.
In the meantime, as I’ve said MULTIPLE times before, I make money BUYING the euro as much as I make selling it. It would be close minded to think it can’t go back up before it fails completely…
True that, mm. Well, I do not even expect an exit of the piigs - at least not soon. The euro is the perfect vehicle for politicians and their “solution” for the gigantic debt bubble. The same like with the buck. A weak dollar and euro is much better for them than a too strong dollar or fiber. Why? They can just inflate that debt away. If Greece let’s say would exit the ez, then how would they inflate the fiber? A consumer country like Greece is in the current stage of that currency the best what can happen for the politicians. Sure they won’t babble about that, because that would cost them their position. Instead they look concerned and babble about rescue and all that, lol.
There is no question if, but when usd AND eur get such a high inflation that this brings so much worry where a new currency will be invented. I do however not expect this within the next say 5 years. I’ve read a lot about currencies of history, inflation, deflation, hyperinflation, currency systems, etc. Anyways, then not the old currencies will be reactivated. That’s really nonsense what never happened anytime in history afaik. Should the dollar or euro go into hyperinflation stage, after a few months then it will be substituted with a new currency. However, right now we are far away from hyperinflation. The real inflation of the fiber is right now anywhere between 7 and 10 percent. And, even if it devalues a lot that doesn’t mean it would be the end. Italy had the Lira for decades and one coffee was 1000 Lira.
I mean, those doomsters are many and they almost no time predict the time of a collapse, whatever it is, right. A collapse comes usually after a rally and rosy sentiment. Like with every trend. People are too bullish and that forces to help a collapse. If I look around now with all the bearish sentiment regarding the fiber I’d rather expect a strong rally is not far from happen.
What happens then with a fx account if any currency collapses should be a rather minor concern, lol. If one were wise enough to insure his wealth with assets which survive such a system reset. 
Yep, it’s surprising alright… NOT…
Germany printing Deutsche Marks, British Foreign Office warns of euro chaos � ArabianMoney
Well, true. If there is smoke then there could be a fire. Or a mirror. Sry to say that, but if you post anything here from any newspaper and back it because it’s the wsj, then this is imho believing in the institution wsj.
In my instance, even the pope could come in person and tell me something and I would still consider this to be nonsense if it’s exactly that!
I studied a lot regarding currencies in history and there was afaik never the case that an old currency became reactivated. Also, if you read this nonsense at wsj, there was not even given a clear source. So I consider this to be a hoax to push the sheeples into selling at a low.
Sure a high price doesn’t prevent it from falling, but with a still 30% higher value than the buck, don’t you think it is really utter nonsense to speculate about a dooms day of the fiber, particular as the buck has some issues as well? I mean, this speculation of a dooms day for the fiber lasts since it was invented. 10 years now and it’s still alive.
That all fiat money will one day bite the dust is no question. Anyways, that will also happen to the usd.
Btw. those mentions could just mean they reprint 100 pieces of cash. Or 1. For whatever reason. Like collectors cut. There is not even a number how many. No source. No nothing.
Let me make this plain and simple.
Bucks, you said:
and the whole world of retail traders is speculating about a fiber crash.
My reply was the posting the headline from the WSJ to show you it in fact WASN’T just the misinformed retail crowd talking about it. I never read the damned article, it didn’t matter what is said. It was the fact that the idea of euro failure wasn’t just coffee shop talk amongst a gaggle of noobs, but in fact a mainstream concern that happened to be pasted on the front page of arguably the widest read financial publication in the world.
Who cares if the WSJ article was slanted, or wrong? The article could have been about little Bo Peep, and her sheep, or the old woman that lived in a shoe. What was inside didn’t matter.
And what do I get back? As usual, other opinions aren’t looked on with an open mind. Not much of a discussion is possible if two sides can’t be plainly stated with one being belittled, or called nonsense.
Odd thing is, the market participants that matter could care less. They’ll deal with it however they have to when/if it happens.
Until something changes, my view is the same as theirs.
Well MT, you can believe in Santa Clause, the Easter bunny and Mickey Mouse or whatever you like. That is really not my concern, lol. You believe in a euro crash since I know you exist. Granted!
Reading the articles you post links of would be however a good thing to do, MT:
[I]It is only a matter of time before the long-awaited Greek debt default brings the house of cards down. Greece has to repay its next debt instalment on December 17th [B]so a pre-Christmas financial market crash is very likely now[/B].[/I]
Well, we didn’t see a christmas crash, whatsoever.
Open mind: My mind is VERY open for logic and good reasons, but becomes - not closed - rather than careful regarding hearsay and belief in institutions or quantity of opinions.
Yes, I exaggerated maybe the bearishness of the whole world of retailers regarding the euro. Anyways, you will probably believe in a crash even in 2020 if the euro is still alive then and hovering at 2.50 eurusd and I will believe in nothing else than my system for trading (if it stays within the limits), my fundamental signals I get over time, my logic, my opinions based on underground information circles and of course my own experience and feedback of trading AND investments.
Believe me, I am not a blind ez believer. Ask Oliver1968, lol! I do however not believe in Santa Clause. The GDR lasted 40 years with their east german playmobil money, lol. [B]40 years![/B] Or look at Cuba! Not that far away as Germany. LOL!
economic disasters is the professional trader’s paradise, who cares if its go up or down or even did not exist anymore.
Hehe true … BC and I had a nice (and extended) quarrel regarding the relative merits of Europe and the USA.
While my main tenor was ‘Thank God I am not a US citizen’ (due to the nonsensical restrictions placed on retail forex trading by the CFTC and various other issues I have with US policy over the last 20 years), Buckscoder proceeded to tell me how much better than the EZ (especially Germany) the USA were.
So I guess you really can’t call BC an ‘EZ Fan’.
In regard of this thread’s topic, I agree that the EUR will not be ‘killed’ anytime soon, if ever.
And while I understand the rationale in having allowed PIIGS in originally and not drumming them out now, it doesn’t make me dislike the fact any less.
I hope that different ways to artificially keep EUR’s relative value down will be developed soon, so that we may rid ourselves of the burning fuse called PIIGS.
I’m rapidly tiring of financing Bankers’ Avarice and Politicians’ Folly with my taxes to the tune of 12 digits annually, while that money could be put to better and way more effective use inside Germany itself.
Cheers,
O.