The Wolfson Economics Prize today announced finalists in the competition to outline a plan that would ensure "the soundest foundation for the future growth and prosperity of the current membership" in the event that "member states leave the Economic and Monetary Union."
As you might imagine, the finalists in the competition are all accomplished economists and financial analysts. However, 11-year old (just 10 when he submitted his plan) Jurre Hermans from the Netherlands has received special recognition from the panelist of judges for his entry in the competition. For his efforts, he has won a €100 gift voucher. Here's his plan for how to solve the Euro crisis:
Dear Sir and Madam,
My name is Jurre Hermans. I am 10 years old and live in the Netherlands. I am quite worried about the eurocrisis and look at the TV news daily. The eurocrisis is a big problem. I think about solutions. Since I read in the newspaper about your price, I thought that I would like to submit my idea. The idea might fit. So here it is:
I made a picture of my solution and I will explain it to you.
Greece should leave the Euro. How do you do that?
All Greek people should bring their Euro to the bank. They put it in an exchange machine (see left on my picture). You see, the Greek guy does not look happy!! The Greek man gets back Greek Drachme from the bank, their old currency.
The Bank gives all these euro's to the Greek Government (see topleft on my picture). All these euros together form a pancake or a pizza (see on top in the picture). Now the Greek government can start to pay back all their debts, everyone who has a debt gets a slice of the pizza. You see that all these euro's in the pizza's go the companies and banks who have given loans in greece (see right in my picture)
Now here comes the clever part of my idea:
The Greek people do not want to exchange their Euro's for Drachmes because they know that this Drachme will lose its value dramatically. They try to keep or hide their Euro's. They know that if they wait a while they will get more Drachmes.
So if a Greek man tries to keep his Euros (or bring his euros to a bank in another country like Holland or Germany) and it is discovered, he gets a penalty just as high or double as the whole amount in euros he tried to hide!!!
In this way I ensure that all Greeks bring their euros to a greek bank and so the greek government can pay back all the debts.
I hope my idea helps you!!!!
Ofcourse if a country has paid back all his debts, he can return to the eurozone.
And the picture:
It may be hard to see in this condensed version of Jurre's diagram, but I assure you, the Greek guy does not look happy!!