Time to move money out of Italy, Greece, Portugal, Ireland, Spain?

It’s been hard to avoid hearing or reading about the troubles of the euro zone of late. And that’s because these troubles can hardly be overstated. Several euro zone countries and banks are on the edge of insolvency and euro zone leaders cannot agree on actions to put the situation right.

Events are moving quickly; the credit rating agency Fitch has now expressed their opinion that a comprehensive solution to euro zone debt is impossible.

The CEO of PIMCO, which manages investments of more than one trillion dollars, has now written that the euro zone:

“faces an increasing probability of… either a disorderly and highly disruptive fragmentation of the euro zone, or the establishment of a smaller and less imperfect euro zone that has a different relationship with the rest of the EU.”

In the event of a country leaving the euro zone there is therefore a possibility that exchange controls could be introduced to prevent capital flight from the country.

This would have financial consequences for anyone who owns property or who has investments in such a country.

The Observer’s business editor Heather Stewart writes that Greek banks lost €14bn in deposits in September and October, as both Greeks and foreigners sent money to safer regimes.

Meanwhile, the Telegraph reports that some French, Italian and Spanish banks have already run out of securities used to finance short-term loans and have been forced to use their gold reserves as collateral to raise cash.

According to figures just released by the Bank of England UK banks have been moving large amounts of money out of some euro zone economies.

France lost most investment from British banks as they moved £19 billion out of the French economy. Exposures to Italy and Spain were were reduced by £8 billion and £5 billion.

Most of the money found its way to Germany, where investments increased by £26 billion and Holland, where almost £14 billion of British banks’ investments found a new home.

In the second half of the year, despite its own debt problems and its creation of money through quantitative easing, the UK’s pound sterling has steadily increased in value against the euro from about 1.10 to about 1.19.