How to Leave the Euro

A more or less Practical Guide

by Serban V.C. Enache

1) The Government spends and taxes in its own free floating fiat currency. It no longer accepts euros (or any other currency) in payment of Government (central and local) fines, fees, taxes, imposts etc.

2) The Government sector (aka the Treasury and the Central Bank) establishes a desired conversion rate between the new currency and the euro. For example, the Central Bank offers to sell 1 unit of new currency for 1 euro at a slight premium, say 0.5 or 1 percent.

3) No compulsory conversion of euro contracts into new currency contracts. It is enough to establish a level of demand for the new currency (giving it extrinsic value) through sound tax policy and adjust supply of said currency to the desired price. Continue reading “How to Leave the Euro”

Monetary Policy Doesn’t Drive the Economy

by Derek McDaniel

To manage a currency, there are two primary tools: fiscal policy and monetary policy. Fiscal policy is all the spending done by the political authority (The Treasury), while monetary policy (setting the price for borrowing liquidity) is conducted by a so-called independent body (The Central Bank). Continue reading “Monetary Policy Doesn’t Drive the Economy”