The first half of 2012 will make or break the embattled euro, as either policymakers will rally together and save the currency or a default will become more likely and the eurozone eventually goes under in its current form, says Thomas Mayer, chief economist at Deutsche Bank.
"The first half of 2012 will be the time when we will get a better feel if the euro is going to survive," Mayer tells CNBC.
"It all depends on whether the Monti government can stabilize the Italian economy and implement reforms."
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Former European Commissioner Mario Monti replaced Silvio Berlusconi as Prime Minister of Italy, the eurozone’s third-largest economy, and is running a caretaker government.
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While a caretaker government is not bound by political pressure and is less likely to sidestep tough decisions in order to get re-elected as would be a normal regime, the Monti administration faces major challenges as does a similar type of government in Greece — lowering debt burdens.
Markets remain nervous over whether Greece will default and prompt Italy and other European nations to follow suit, which would end the eurozone in its current form.
Despite moves to shore up banking systems should a default in southern Europe occur, financial systems on both sides of the Atlantic are not prepared for such an event, says Jes Staley, chief executive officer of the investment-banking unit at JPMorgan Chase.
"Raising the notion that a European government or any government would actually back away from its obligations is something that the market really is not set up to deal with," Staley tells Bloomberg.
"Once you establish that a country in the eurozone can walk away from its debt obligations where does it stop?"
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