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Bootle wins Euro exit prize

By Michael Millar

Date: Thursday 05 Jul 2012

Bootle wins Euro exit prize

Economist Roger Bootle and his team at Capital Economics have won a quarter-of-a-million-pound competition to find the best way for a country to exit the Euro.

The Wolfson Economics Prize is the second most lucrative in economics after the Nobel Prize and was set up last year by Lord Woolfson, the Chief Executive of retailer Next.

Capital Economics’ submission was one of over 400 entries, which included research teams at banks, economic research firms, and leading economists.

The prize was awarded for the best answer to the question: “If member states leave the Economic and Monetary Union, what is the best way for the economic process to be managed to provide the soundest foundation for the future growth and prosperity of the current membership?”

Bootle's response focuses on the departure of a single weak country such as Greece and involves the overnight introduction of a national currency.

The steps it envisages include:

- The initial conversion rate would be 1 for 1 but the currency would be allowed to fall sharply on the exchanges;
- Electronic payment methods and euros could be used until new notes and coins are introduced;
- The exiting country would redenominate its debts into the new currency and announce a set of tough fiscal rules and a regime of inflation targeting.

Bootle said: "People may disagree on whether leaving the euro is a good thing, but the contribution of the Wolfson Prize has been to demonstrate that it can be done”.


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