Just 8 months ago, in a historic referendum, the United Kingdom voted to leave the European Union. The decision was prompted by the UK’s frustration with EU mandates on controversial issues such as immigration and rising taxes and regulations on business.
Since Brexit, whispers of other countries following suit and leaving the European Union have been plentiful. Most recently, speculation of a “Dexit” (Deutschland exit) is circulating through markets and media.
Why do some predict the German departure from the EU? Most believe the possibility of a Dexit exists due to the recent German repatriation of its gold from New York to Frankfurt. The repossession comes three years ahead of schedule, which has caused onlookers to question the motives of Deutsche officials.
Should Germany leave the EU, the euro would likely face its biggest hurdle- one from which it might not recover. The repatriation of gold would allow Germany to create its own Deutsche marks, backed by its gold reserves.
While some media analysts attributed the movement of gold from the Federal Reserve Bank of New York back to Germany as an indication of German distrust in President Trump’s ability to provide safe housing for the reserves, a spokesperson for the Deutsche Bundesbank (the central bank of the Republic of Germany) commented that Trump had not been part of the discussion to bring home the gold.
Is the largest member of the European Union preparing to leave the troubled organization? Time will tell, but signs indicate its possibility. If the arguably most important nation in the EU were to leave, would others follow? Could the EU persist? How do you think the markets will react?
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