When one euro is worth more than another

Faisal Islam has a very interesting report from Davos on how at least one bank no longer believes that a euro from Ireland, say, is worth the same as one from Holland or Germany. He writes that:

‘A leading European bank has begun to account for euros differentially, by nation state. That is to say, they are differentiating a risk to euros that originate in a potentially defaulting country from that of a euro-cert. They, in effect, have invented the concept of a German, Greek and Irish euro. Now we accept that government debts from these nations are different. The idea that a bank treats cash differentially, is an incredible development. I understand that this would allow this bank to account for an “internal exchange rate”, within the euro, between a strong country and a weak one. And the bank in question suspects they are not the only one.’