How a banking crisis could sink the euro

A loss of confidence in the banking system of a euro member country could potentially result in all of that country’s bank liabilities effectively ending up as the liabilities of the ECB. The sheer scale of the sums involved could overwhelm the euro system and face the euro-zone authorities with a ghastly dilemma which could readily result in them choosing the break-up of the single currency as the lesser of three evils.