HEAD ECONOMIST OF DEUTSCHE BANK WARNS: The Eurozone, at risk of splitting apart

The situation of the European Union is more "serious" than ever, in the ten-year history of the European currency, as there might very well be the risk of a fragmentation of the Eurozone due to the shakiness of the Greek, Irish and Portuguese economies, chief economist of Deutsche Bank, Thomas Mayer, warns.

"If the issues that Greece is faced with and their consequences are not handled quickly, at worst we could see the disintegration of the Monetary Union or we could see it turn into an inflation area", Thomas Mayer explained in an interview issued to Die Welt. The head-economist of Deutsche Bank considers that if the situation is not remedied, the rest of the European countries which were badly hit by the crisis, such as Portugal, Ireland or Spain, will most likely end up in a situation similar to that of Greece.

"It"s hard to believe that these countries would leave the Eurozone, because for this provides with a protection that is hard to give up on. But the other economically stable countries, which are suffering from the degradation of the European currency, could drop the Eurozone faster. According to the European Constitution, Germany can exist the Eurozone if the Monetary Union no longer proves a guarantee of its stability.

Mayer"s hypothesis was confirmed on Friday by the Governor of the Greek Central Bank, George Provopoulos, who said that Greece needs to stay in the Eurozone, "which would undoubtedly make its issues easier to solve", instead of having it return to a new currency which it would then allow to depreciate, thus causing accelerated inflation and increased interest rates.

"A new currency would not be like using a magic wand. A depreciated currency would cause the cost of imports to rise, would accelerate inflation and increase the cost of financing the public debt", Provopoulos concluded.

Greece"s current crisis shows that Europe lacks the necessary instruments for handling this type of situations, feels Thomas Mayer. That is why, he somewhat ironically suggested the quick creation of Monetary European Fund, which would " guarantee the fact that the aid programs for Europe would be elaborated in Brussels instead of Washington".