ECONOMISTS have been challenged to create a plan for the orderly exit of countries from the Eurozone, with a prize sponsored by Next chief executive Lord Wolfson, the peer announced today.
“There is a very real possibility of a Eurozone collapse, and a disorderly rout represents the worst possible option which would put at risk savings, banks and the stability of all European nations,” said Wolfson.
“But if a government says it is determining how a nation’s exit would work, it risks making the situation worse.”
“That leaves a policy void to be filled, and I hope this prize attracts serious intellectual power from academic, city and commercial economists.”
Solving the problem would be no mean feat. All contracts in affected countries would be undermined if currencies changed, devastating debtors and creditors, buyers and sellers. And runs on banks could become runs on countries if cash is moved from a nation leaving the Eurozone to one staying in.
Policy Exchange and Lord Wolfson, who jointly announced the prize, hope to attract a range of approaches.
“Historical examples of disintegrating unions can be studied, the macroeconomic implications are enormous, the legal elements must be unwound and there are tactical questions for central bankers to address – what kind of currency areas would be the best replacement for the current Eurozone?” said Wolfson.
The competition is open to entrants from any country, and the winner will be awarded a £250,000 prize.