Eurozone: No More Time for Speculating, Time for Action!

As the eurozone saga continues to unravel, with David Cameron issuing fresh warnings to European leaders to get their houses in order, we are none the wiser about whether we are in store for a happy or tragic ending.

As the eurozone saga continues to unravel, with David Cameron issuing fresh warnings to European leaders to get their houses in order, we are none the wiser about whether we are in store for a happy or tragic ending.

However, regardless of how the story will pan out, change is coming and conversations need to start to evolve to discuss how market participants and banks need to get wheels in motion to restructure infrastructure, in order to deal with a return to sovereign currency - or a new 'Euro' to what we know today.

Politicians, advising that the euro - in its current state - is here to stay, are increasing the operational and market risk of Europe's financial institutions. Immediate action and contingency planning needs to be happening now and politicians should be using their clout to make this happen.

Each day, there is further groundswell calling the end of the euro, reasoning that the economic outlook in one, or more, of the member states makes it unsustainable. We hear news reporting major institutions such as the Bank of England, ICAP, and CLS - a fundamental part of the FX settlement and clearing landscape - are testing euro break-up scenarios. If the end is nigh, it is curious that this testing is reported as 'news', as this implies not everyone is testing break up scenarios yet. This is particularly odd, because if the euro break up happens, there will be challenges way over and above surviving the economic turmoil which will result.

When the euro was formed, there was a politically-driven timescale which allowed plenty of time to plan, test the impact of change, and the work needed to handle it. Resource was directed to ensure all aspects of the euro launch were safe and successful - all in all, it was executed without a hitch.

Project forward to the rest of 2012, when I believe the Euro will change shape, there will not be a year's grace to prepare. The breakup scenario - in whatever shape it takes - will be as a result of market position making the euro, in its current form, untenable.

As central banks did not foresee a need to plan for the collapse of the euro, there have been no frameworks, conversion processes or contingency plans prepared. This planning is now being undertaken at a time of market turmoil, with volatility levels as never before seen. This is an absolutely astounding level of risk for an institution to accept.

However all market participants must accept this, and they must move quickly to prepare - for many eventualities, as who knows what the powers that be will ultimately propose.

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