Roger Bootle, managing director of Capital Economics and speaker at the Fourth Annual CFA Institute European Investment Conference, has called for a division of the euro in his latest column for The Telegraph.
As discussion swirls around whether or not Greece should leave or be forced out of the European Union, Mr. Bootle argues in his column that “if Greece were to leave, the greatest threat to the continuing existence of the euro would come from the possibility that a combination of default and depreciation would improve her economic performance.” He further points out that economic improvement in Greece stemming from its departure from the euro might encourage other weak European economies to disengage from the euro and go back to their own currencies.
Instead, Mr. Bootle proposes that Germany leave the euro, “along with her satellites,” to create two currencies: a northern euro and a southern euro. Mr. Bootle favors a dual currency solution because “this splitting of the euro into two would provide support for the weaker countries in that they would still be part of a currency grouping, their government debt would still be in their own currency (the euro) and they would avoid the severe legal and technical problems involved in creating a new currency.”
You can read the complete column at The Telegraph‘s website
At the Fourth Annual CFA Institute European Investment Conference, Mr. Bootle will be discussing The Trouble with Markets in a presentation that examines a number of topics, including the flaws inherent in central banks and whether a laissez-faire approach is an effective solution to financial problems.