UBS on Euro Break Up

Below I have included a research report by UBS about a Euro break up. Key points:

1. Under the current structure and with the current membership, the Euro does not
   work. Either the current structure will have to change, or the current membership
   will have to change.
2. Our base case with an overwhelming probability is that the Euro moves slowly
   (and painfully) towards some kind of fiscal integration. The risk case, of break-up,
   is considerably more costly and close to zero probability. Countries can not be
   expelled, but sovereign states could choose to secede. However, popular discussion
   of the break-up option considerably underestimates the consequences of such a
   move.
3. The cost of a country leaving the Euro is significant sovereign default, corporate default, collapse of the banking system and collapse of international trade.
4. The only way to hedge against a Euro break-up scenario is to own no Euro
   assets at all.

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