Wolfgang Richter Participates in Thought Leaders Breakfast Series in Frankfurt
Berlin, Germany - Earlier today, Dr. Wolfgang Richter, ACGM’s Senior Advisor and European Representative, took part in a press breakfast and panel discussion focusing on parallel currency concepts. Dr. Richter was joined on the panel by Thomas Mayer, Senior Fellow at the Center for Financial Studies, Goethe University Frankfurt. Mr. Mayer was previously Chief Economist of Deutsche Bank Group and Head of Deutsche Bank Research. Both Dr. Richter and Mr. Mayer are considered experts in parallel currency concepts and have published parallel currency proposals. The discussion, which was part of The Early Editors Club’s regular press breakfast meetings, was moderated by Dr. Philip Plickert, business editor of the Frankfurter Allgemeine Zeitung.
The Early Editors Club’s mandate is to provide a platform for dialogue between prominent economic and financial journalists and industry thought leaders from across Germany, Austria, and Switzerland. The organization regularly holds breakfast meetings in Berlin, Dusseldorf, Frankfurt, Hamburg, Munich, Vienna, and Zurich, allowing industry experts and journalists to exchange ideas on current topics and trends.
The three hour event, held in Frankfurt, included a thought provoking discussion of parallel currency concepts. Several broad questions were discussed: Would a parallel currency solution be useful or feasible within of the euro zone? How would a parallel currency be implemented within a troubled euro zone state? What would be the benefits and risks of introducing a parallel currency? What safeguards would be in place to ensure the eventual withdrawal of the parallel currency and the orderly return of the euro as sole currency? The general consensus was that parallel currency concepts deserve serious consideration if the euro zone debt crisis flares within the periphery again.
Dr. Richter and Rafael de Arce Borda, Professor of Econometrics at Universidad Autónoma de Madrid, recently published an article in Germany’s Frankfurter Allgemeine Zeitung discussing a parallel currency solution to peripheral Europe’s economic woes. This article followed the publication of a paper entitled “Euro or Drachma? Or Both? A Plea for a Parallel Currency Concept”, in April 2013.
The parallel currency solution provides a less painful alternative to the austerity approach which has dominated conventional discourse. Most politicians and commentators have ignored parallel currency concepts and have only offered internal devaluation via austerity and a euro zone exit as solutions for peripheral euro zone nations in crisis.
Parallel currency concepts allows external devaluation with respect to future value creation and would enable the peripheral countries to pay off their debts by generating an adequate primary surplus, through increased international price competitiveness and resulting improvements in overall economic health. This is something that existing austerity policies have failed to achieve. None of the peripheral countries have been able to reduce their debt ratio - on the contrary, they continue to rise.
Dr. Richter and Carlos Abadi, ACGM’s President and CEO, have been actively involved in the euro crisis debate. In 2012 Dr. Richter, based in Berlin, and Mr. Abadi, based in NY, led a European roundtable series, attended by European business leaders and policymakers and organized by DLA Piper, to discuss the crisis in Europe and potential opportunities, outcomes, and solutions. In November of 2012 Mr. Abadi was invited by The New School and the United Nations Association of the United States to join a panel of distinguished academics and industry professionals to discuss the EU sovereign debt crisis. Drawing upon his extensive personal and professional experience of the Latin American debt crises of the 1980s and 90s, Mr. Abadi has offered comparisons between this crisis and the current European situation, and highlighted lessons that can be learnt from Latin America’s experience.
As a firm, ACGM is involved in a number of financial transactions and advisory assignments that have arisen out of the euro crisis. The firm’s European expertise and high profile US customer base have enabled ACGM to position itself in the burgeoning market for European distressed assets. In addition, amidst the increasing capital requirements faced by European banks, ACGM has been working on developing compelling solutions for enabling European banks to meet new capital requirements, whilst minimizing cost of capital, and doing so in adverse environments, through its Consolidated Affiliate Model (“CAM”).
The full Frankfurter Allgemeine newspaper article can be accessed by clicking here Download PDF
Frankfurter Allgemeine subscribers can also access the article here.
The full parallel currency paper can be accessed by clicking here Download PDF
An abridged version of the paper was recently published by EconoMonitor (A Roubini Global Economics Project) and can be accessed on their site by clicking here.
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