ING warns of ‘dramatic divergence’ in interest rates if euro fails

The Hague-based ING has warned that in the event that the European Monetary union (EMU) is dissolved, European sovereign bond yields would dramatically diverge between less than 1% for Germany and 7–12% in distressed southern European countries, while corporate bond spreads would widen by 300 basis points, with huge implications for multinational insurers.

The stark scenario comes in a report, EMU Breakup: Quantifying the Unthinkable, by the Dutch firm outlining the implications of the failure

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