This essay aims to provide a practical step-through of the issues around euro exit. It is pleasingly clear and methodical, and crisply written.
The central focus is how to achieve a fall in real wages and prices with the minimum practical disruption. This essay proposes that government debt and consumer debt be redenominated into euros deploying the lex monetae principle -- in other words, that each country determines the currency applicable under its laws. For example, Greek law determines the currency to be used under Greek law contracts, so if Greece changes its currency, the contracts set under Greek law change -- and foreign courts will recognise this.
However, it proposes that corporate sector contracts be left to be determined by courts (in a few cases contracts will be interpreted in terms of national currency; in most in terms of the euro). There would then be a large default on debt to reduce the debt to GDP ratio to 60%, and the currency would depreciate or be devalued.
