When Mario Draghi said on 26 July that a “convertibility risk” was preventing the smooth functioning of the ECB’s monetary policy across national borders inside the eurozone, he was breaking a taboo which has been stubbornly followed by all of his predecessors in the project to create a durable single currency. (See Alphaville here.) That taboo is that no-one in the ECB should ever admit that the euro might break apart. The objective of the taboo (which admittedly has previously been broken in the “special case” of Greece) has always been to ensure that markets should not feel the need to reflect any concerns about possible foreign exchange risk among the member states which comprise the euro. Draghi breaks the ultimate euro taboo | Gavyn Davies.
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