Deutsche Bank has warned that dumping the euro may be damaging to the European Union’s economic growth engine and trade with other countries, but the bank says it’s still not sure.
In a note to clients on Thursday, the bank said the dumping of the euro by countries with less-developed trade relations with the EU may have the unintended effect of causing inflationary pressures in their economies.
The bank noted that while Germany is the eurozone’s biggest economy, and the largest market for its products, it has also seen the biggest decline in exports in recent years.
The currency was trading near its all-time low against the U.S. dollar in early August, as it had been since last October.
The bank has long warned of the impact of a currency-swap crisis on the economy.
“We believe that if the EU adopts policies that do not help countries struggling to cope with the effects of the current crisis, they may not be able to fully absorb the economic impacts of this crisis,” the bank’s economists said.
“If this happens, it could further damage our economy.”
The bank, which had long been critical of the EU’s handling of the debt crisis, said the EU has shown itself to be a willing partner in a trade war, with many EU countries using their veto power to stop countries from dumping the currency.
The move to trade with the U