Photo: Policy Exchange/YouTube
Capital Economics’ Roger Bootle was was awarded the £250,000 ($388,250) Wolfson prize this morning for coming up with the best plan for a country to exit the Eurozone.His team’s submission was chosen from among 425 entries.
From the Policy Exchange, here are the essentials of his winning plan:
- A new currency is introduced at parity with the Euro on day 1 of an exit.
- All wages, prices, loans and deposits are redenominated into it 1 for 1.
- Euro notes and coins would remain in use for small transactions for up to six months.
- The exiting country would immediately announce a regime of inflation targeting, adopt a set of tough fiscal rules, monitored by a body of independent experts, outlaw wage indexation, and announce the issue of inflation-linked government bonds.
Bootle even proposed a timeframe for these events.Officials in the exiting countries would meet in secret a month before announcing a day of exit. Other Eurozone countries would be notified three days before—ideally on a Friday—that the changover would occur the following week.
Banks and markets would be immediately closed to prevent flight. The country would renegotiate the terms of ifs debt, most likely including some default.
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