Catalans Risk Euro Exit, Deposit Freeze in Vote, Linde Says

  • Independence would mean euro exit, central bank governor says
  • Catalans vote Sunday in regional ballot focused on secession

Catalonia will be kicked out of the euro if it secedes from Spain, leaving the region’s banks shut off from European Central Bank funding, Bank of Spain Governor Luis Maria Linde said.

Catalans will vote Sunday in an election that regional President Artur Mas is framing as a referendum on independence. European officials say that Catalonia would have to re-apply to join the European Union if it seceded, and that process would see the region excluded from the single currency too.

“Catalonia’s euro exit would be automatic,” Linde said during a panel discussion in Madrid on Monday. “If there were serious tensions there could be a deposit freeze, as we’ve seen in Latin America and Greece.”

Responding to Linde’s comments, Catalan regional president Artur Mas said the central bank is trying to scare Catalans ahead of Sunday’s vote to discourage supporters of independence. Describing his remarks as "irresponsible" and "indecent", Mas urged voters to defy the naysayers by showing up the polls on Sunday.

"I ask the people not to fall prey to this strategy of fear which is designed to maintain the status quo for those already in power," he said.

Gaining Support

Support for independence has surged in Catalonia over the past five years since the Spanish Constitutional Court struck down parts of a law granting the region additional powers following an appeal by Prime Minister Mariano Rajoy’s People’s Party. Mas argues that the intransigence of officials in Madrid means that Catalonia, which is Spain’s largest regional economy, would be better striking out on its own.

Rajoy says that the Catalans’ aims would be illegal under the Spanish constitution and has vowed to prevent them moving ahead.

An opinion poll by DYM Institute released Friday showed the main pro-independence bloc is set to win 42.4 percent of the vote, enough for as many as 65 lawmakers in the 135-seat regional assembly. A smaller separatist group, CUP, could win as many as 11 deputies creating a majority in favor of breaking away from Spain.

Telefonica SA Chairman Cesar Alierta said independence would be “supernegative” for Catalonia because of the disruption to its trade with the rest of Spain, according to a report by El Pais newspaper.

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