One way to save the euro

Whilst relatively quiet at the moment, the eurozone sovereign debt crisis continues to rumble along beneath the surface.

Recent measures to restructure Greek debt and by the European Central Bank to inject liquidity into the banking markets have deferred rather than solved the underlying problems.

Perhaps the right way to save the euro is as simple as the solution suggested by an 11 year old boy.

Dutch schoolboy Jurre Hermans was commended in the Wolfson Economics Prize, a major competition attracting some of the top economists in the world.

His solution to the eurozone debt crisis is for Greece to swap their euros for drachmas, using the analogy of a giant pizza of money slices with debt repayment the incentive for handing back euros.

The Wolfson Economic Prize has a shortlist for five entries from leading economists who each attempted to answer 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?”

The departure of a euro member from the single currency is still an unknown quantity, although remains a real possibility.

It is believed that the eurozone could become stronger if an orderly departure of a debt-laden member state, such as Greece, is achieved.

Of course achieving this in an orderly fashion could represents the real challenge.

Photo credit: flickr/ildebrand