LONDON Secret planning, bank closures and debt redenomination formed part of a notional blueprint that won a British contest on Thursday on the least disruptive way for a euro zone country to exit the single currency.
UK-based consultancy Capital Economics received the 250,000 pound ($387,000) prize from contest sponsor Simon Wolfson, chief executive of British clothing chain Next and a Conservative peer in the upper house of parliament.
The one-off contest, managed by centre-right UK think tank Policy Exchange, received more than 400 entries since its launch at the height of the euro crisis last October.
Capital Economics director Roger Bootle said his team's winning entry was not intended to be an easy solution to the euro problems but a practical guide to how a country such as Greece could go about leaving the zone and managing the fallout.
"Europe is in the middle of what could be an appalling catastrophe," he told reporters after receiving the prize.
The winning proposal outlined an 18-point exit guide that a government such as Greece could follow. This included closing banks and introducing an official one-for-one exchange rate with the euro and its new currency, with wages, bank deposits and loans redenominated one-for-one. This would allow the depreciation of the new currency on foreign exchanges.
BRITAIN'S GOT ECONOMIC TALENT
The plan said a month of secret planning by a small group of top officials including the prime minister, finance minister and central gank governor would be necessary to prevent panic.
Three days of notice could then be given to euro zone partners followed by public announcements, bank closures and some temporary capital controls.
Intense strains on the euro zone have eased slightly since Greek elections returned pro-bailout parties to power by a narrow majority last month and European leaders last week outlined new proposals for greater integration.
Wolfson said he offered the prize to get people thinking about ways to minimise the damage from a collapse of the euro, given that no formal procedures for a country exiting the euro were outlined in European treaties.
"The break-up of the euro looks ever more likely," he said.
Britain is a member of the European Union but has remained outside the 17-nation euro zone since its launch in 1999. However, its economic prospects are closely tied to the fate of the single currency via trade and financial links with the bloc.
The Wolfson contest was judged by academic economists that included London School of Economics professor and former Bank of England policymaker Charles Goodhart and University of Bonn and Bundesbank adviser Manfred Neumann.
Critics, however, said the contest looked like a public relations move on behalf of "eurosceptic" British political groups while others questioned the rigour of the process.
Centre for Economic Policy Research director Richard Baldwin described it as a "'Britain's Got Talent' approach to policy analysis" - referring to the popular television talent show - and claimed it was potentially dangerous for promoting analysis from some contributors who had no formal economics training.
(Reporting by Mike Dolan; Editing by Belinda Goldsmith)
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