The team won the 2012 Wolfson Economics Prize, as well as a cheque for £250,000, after answering 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?”
Capital Economics, one of 400 entries, provided what the judges called the “most credible solution”.
Bootle (pictured) and co suggested if a weak country such as Greece exited the single currency, it should introduce a national currency overnight, with an initial conversion rate of 1 for 1.
It said this rate would then be allowed to fall sharply on exchanges, with electronic payment methods and euros 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,” it said.
Bootle said while people may disagree on whether leaving the euro is a good thing, the plans put forward by Capital Economics and others show it could be done.
