$400,000 prize offered to break up the euro

@CNNMoney November 11, 2011: 4:46 PM ET

NEW YORK (CNNMoney) -- Economists are terrified about the chaos they expect if some countries decide to stop using the euro. But one person thinks there may be a way to jump ship safely -- and he's got a $400,000 bounty for anyone who can figure out how to do it.

Simon Wolfson, the CEO of European retailer NEXT, is offering a prize of £250,000 -- about $400,000 -- to the person or group that comes up with the solution for how one or more of the 17 countries now using the European common currency can stop using it without causing a massive shock to the global financial system.

"There is now a real possibility that political or economic pressure may force one or more states to leave the euro," said Wolfson in a statement announcing the prize. "If this process is mismanaged it could threaten European savings, employment and the stability of the international banking system. This prize aims to ensure that high quality economic thought is given to how the euro might be restructured into more stable currencies."

Most major political and banking leaders in Europe, including Mario Draghi, the new head of the European Central Bank, insist there's no way a country will drop out of the euro.

A CNNMoney survey of economists in September found only five of the 22 polled believe a country would exit the currency. But the unthinkable has become more thinkable in recent weeks as debt problems continued to mount in Greece, Italy and several other European countries.

Wolfson has been an opponent of Great Britain adopting the euro, and he said countries that do use the euro and who may now want to stop using it need a plan, because an unplanned exit would be far worse.

"My biggest worry is something may happen before we even have the answers in," he told CNN International. "I sincerely hope that...all the central banks in Europe are basically working on exactly the same problem. Because if they're not, we could have chaos."

Submissions are due Jan. 31. A list of finalists is due to be announced March 6, with a winner announced March 27. But if judges determine that none of the submissions would provide for a successful way of breaking up the euro, then the deadlines could be extended.

He said more than 600 economists, including at least one Nobel Prize winner, have already expressed interest in submitting a plan for consideration. The prize would be the second most lucrative award for economists, behind only the Nobel. Wolfson said he attached the cash prize, which he is funding out of a family trust, because "the money means the prize is serious."

"Economists have been thinking about this. But I don't think one person has really thought through every element of it," Wolfson said.

The Maastricht Treaty, which established the European Union and laid the ground work the euro, does not have any provisions in it for a country deciding to no longer use the currency.

Since the currency started being used in 2002, contracts and loans have all been written in euros in the countries that use it, so abandoning it would cause widespread problems.

"Just to give you a feel for the complexity of the question, what happens to private debt?" Wolfson asked rhetorically.

"If you're in the euro and your country falls out of the euro, what happens to your mortgage? (The bank) might be in a different country. It might have leant you the money in euros, and you're suddenly earning, say new drachmas, and you can't afford to pay your mortgage in old euros anymore," he said. "All these things are desperately important to be thought through." To top of page

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