What will happen if a country exits eurozone
Leaving the euro: A practical guide
4 June 2012
A revised submission for the
Wolfson Economics Prize MMXII by Capital Economics
Lead author: Roger Bootle
Capital Economics Limited, 150 Buckingham Palace Road, London. SW1W 9TR
Telephone. +44 (0)20 7823 5000 e-mail: roger.bootle@capitaleconomics.com
Registered Office: As above. Registered in England No. 2484735 VAT No. GB 713 8940 25
Leaving the euro: A practical guide
CONTENTS
1
Introduction .................................................................................................................................................. 3
1.1
1.2
The form of break-up ............................................................................................................................ 6
1.3
2
Our approach to the question ................................................................................................................ 3
The plan of this essay ............................................................................................................................ 8
The logic and structure of euro break-up ................................................................................................ 10
2.1
2.2
A central scenario for break-up ........................................................................................................... 21
2.3
Historical examples ............................................................................................................................. 23
2.4
3
Why the euro-zone needs radical economic adjustment, and the case for break-up ........................... 10
Winners and losers .............................................................................................................................. 26
Managing the decision ............................................................................................................................... 31
3.1
3.2
Legal
4 June 2012
A revised submission for the
Wolfson Economics Prize MMXII by Capital Economics
Lead author: Roger Bootle
Capital Economics Limited, 150 Buckingham Palace Road, London. SW1W 9TR
Telephone. +44 (0)20 7823 5000 e-mail: roger.bootle@capitaleconomics.com
Registered Office: As above. Registered in England No. 2484735 VAT No. GB 713 8940 25
Leaving the euro: A practical guide
CONTENTS
1
Introduction .................................................................................................................................................. 3
1.1
1.2
The form of break-up ............................................................................................................................ 6
1.3
2
Our approach to the question ................................................................................................................ 3
The plan of this essay ............................................................................................................................ 8
The logic and structure of euro break-up ................................................................................................ 10
2.1
2.2
A central scenario for break-up ........................................................................................................... 21
2.3
Historical examples ............................................................................................................................. 23
2.4
3
Why the euro-zone needs radical economic adjustment, and the case for break-up ........................... 10
Winners and losers .............................................................................................................................. 26
Managing the decision ............................................................................................................................... 31
3.1
3.2
Legal