The option of last resort: a two-currency EMU

Arghyrou, Michael Georgiou ORCID: https://orcid.org/0000-0001-6222-5086 and Tsoukalas, John 2010. The option of last resort: a two-currency EMU. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University. Available at: http://business.cardiff.ac.uk/sites/default/files/...

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Abstract

This article, originally published at www.roubini.com on 7 February 2010, spells out our two-currency EMU proposal as a plan of last resort for resolving the present EMU sovereign-debt crisis. The key ingredients of our proposal involve a temporary split of the euro into two currencies, both run by the European Central Bank. The hard euro will be maintained by the core-EMU members whereas periphery EMU countries will adopt for a suitable period of time the weak euro. All existing debts will continue to be denominated in strong-euro terms. The plan involves a one-off devaluation of the weak euro versus the strong one, simultaneously with the introduction of far-reaching reforms and rapid fiscal consolidation in the periphery EMU countries. We argue that due to enhanced market credibility, our two-tier euro plan has a realistic chance of success in resolving the EMU crisis, if all other approaches fail.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	euro, two-currency EMU
Additional Information:	Working Paper no: E2010/14. This working paper was originally published as a blog post on EconoMonitor blog, 7 February 2010: http://www.economonitor.com/blog/2010/02/the-option-of-last-resort-a-two-currency-emu/
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	24 Oct 2022 11:30
URI:	https://orca.cardiff.ac.uk/id/eprint/48329

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