The decision last year by a majority of British voters to exit the European Union was more than a simple vote of the people. The Brexit campaign was promoted and financed by the most influential banks of the City of London and by the British Royal House. Far from the end of Britain, Brexit is far more likely to be the beginning of the end of the disastrous Euro single currency experiment.

Since the global financial crisis of 2008 little significant has been done by Brussels or the governments of the 19 member Eurozone countries to bring the largest banks of the Eurozone into a healthy stability. On the contrary, even venerable mega-banks like Germany’s Deutsche Bank are teetering on the brink.

In Italy the world’s oldest bank, Monte Paschi di Siena, is on state life-support. That is but the tip of an iceberg of Italian bank bad debts. Today in total Italy’s banks hold Italy’s banks hold €360 billion of bad loans or 20% of Italy’s GDP, which is double the total five years ago.

It gets worse. Italy is the fourth largest economy in the EU. Its economy is in dismal shape so bank bad loans grow. State debt is almost as high as that of Greece, at 135% of GDP. Now, since the 2013 Cyprus bank crisis, the EU has passed a stringent new bank “bail-in” law, largely under German pressure. It stipulates that in event of a new banking crisis, a taxpayer bailout is prohibited until bank bond-holders and, if necessary as in Cyprus, its bank depositors, first “bail-in” or take the loss. In Italy, most holders of bank bonds are ordinary Italian citizens, with some €200 billion worth, who were told bank bonds were a secure investment. No more.

German Austerity Medicine Killing Patient

A major problem is that the Eurozone economies have been forced to impose the wrong medicine to deal with the 2008 financial and economic crisis. The Eurozone crisis has been wrongly seen as states spending too wildly and labor costs rising too high. So, under again German pressure, the Eurozone countries in crisis such as Greece, have been forced to impose draconian austerity, slash pensions, cut wages. The result has been even worse economic recession and rising unemployment, rising bank bad loans. By 2015 Greece’s GDP had declined by more than 26%, Spain’s GDP by almost 6%, Portugal by 7%, and Italy’s GDP by almost 10% compared with 2008.

Austerity is never a solution to a state economic crisis. The example of the German economic crisis that erupted in 1931 in depression, unemployment and a banking crisis as a consequence of the severe austerity policies of Chancellor Heinrich Brüning ought to be clear enough to German authorities whose historical memory seems to have amnesia today.

Across the Eurozone more than 19 million workers are jobless. Greece, Italy, Portugal and Spain have a total of an unprecedented 11 million unemployed workers. In France and Italy unemployment is over 13% of the labor force. In Spain it is 20%, and in Greece a staggering 25%. This is all the state of economic affairs more than 8 years after the 2008 crisis. In short there has been no economic recovery in Euroland. Since 2009 the European Central Bank (ECB), the bank of the Euro, has made unprecedented moves to try to stabilize the banking crisis. They have only postponed not improved the situation.

Today as a result of ECB buying of mortgage bonds, corporate bonds, state bonds, and asset-backed securities, the ECB balance sheet is more than €1.5 trillion. The ECB, whose President is Italian Mario Draghi, has held interest rates in an unprecedented negative interest rates around -0.4% since June, 2014. The ECB has made clear that negative central bank interest rates will remain “for some time.” This is leading some to try to convince voters to go to a cashless society as India did last year with catastrophic consequences and as Sweden, not a Euro country, has largely done. If banks begin to charge their customers a fee for using customers’ deposits, an incredible thought for most, people would simply “take the money and run,” into gold or other safe assets, or cash.

The ECB negative interest rates are a sign of desperation to put it mildly. With interest rates on bonds across the Eurozone so low, many insurance companies are facing severe liquidity problems meeting their future obligations unless Eurozone interest rates return to more normal levels. Yet were the ECB to end its negative interest rate policy and its quantitative easing so-called, the debt crisis of many banks would explode from Greece to Italy to France to even Germany.

A Coming Currency War?

So, to put it gently, the Eurozone is a ticking debt time bomb ready to blow at the slightest new shock or crisis. We may well see that shock in the next two years, once Britain has completed its exit from the EU. Already the new Administration of Donald Trump in Washington has signaled a potential launch of currency war against the Euro. On January 31, US Trade Czar Peter Navarro accused Germany of using a “grossly undervalued euro to exploit” the US and Germany’s EU partners. Navarro went on to call Germany, the core of the Eurozone economies, a de facto “currency manipulator.” Navarro has stated, “While the euro freely floats in international currency markets, this system deflates the German currency from where it would be if the German Deutschmark were still in existence.”

Britain with the vast financial resources of the City of London, once free from the shackles of the EU membership, could well join with Washington in a full-scale covert currency war to bring down the Euro, something that would have devastating consequences for the Eurozone economies. Britain’s Pound is the third largest global payments currency after the dollar and the Euro. If Britain, free from the restraints of the EU can bring down the Euro, the Pound could become a major gainer–currency war with Britain on the side of Washington against the fragile Eurozone with their Italian, Greek, Spanish and other problems. Already British Prime Minister Theresa May is in discussions with the Trump Administration about forging a bilateral US-UK trade agreement and some in influential UK circles are talking of inviting the USA to become an associate member of the British Commonwealth. For the US dollar and Wall Street banks, wounding the rival to the dollar as central bank reserve currency is a very tempting thought. Now with Britain and the City of London soon to be free of EU restraints, the temptation might become reality.

All of this is because of the dysfunctional nature of the entire Eurozone project, a supranational currency with no democratic elected authorities to control abuses. The half-way dissolution of national sovereignty that the Maastricht Treaty introduced with the European Monetary System back in the 1990s, has left the EU with the worst combination in event of future crisis.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook.”