April 17, 2013 16:29 ET

Euro or Drachma? Or Both? A plea for a parallel currency concept

NEW YORK, NY--(Marketwired - Apr 17, 2013) - ACGM Employees Wolfgang Richter and Carlos Abadi today published a paper entitled "Euro or Drachma? Or Both? A plea for a parallel currency concept." The paper discusses the temporarily introduction of parallel currencies in distressed Eurozone (EZ) countries as a means of restoring economic growth and stability. The paper was co-authored by Rafael de Arce Borda, Professor of Econometrics at Universidad Autónoma de Madrid. Massi Ibrahim and George Nixon also contributed to the paper.

The parallel currency concept contemplated in the paper allows distressed peripheral euro states to achieve the benefits of instant devaluation whilst remaining within the EZ and provides a defined schedule for full reintroduction of the euro as sole legal tender. The parallel currency concept expands the euro crisis debate by putting forth a constructive, practical alternative to internal devaluation and EZ exit policies -- both of which have significant downsides. The paper uses Greece as a test case in order to model the parallel currency concept.

Both Dr. Richter and Mr. Abadi 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 Financial Times has discussed the CAM model as a potential alternative to the "CoCo" note see here [].

The full parallel currency paper can be accessed by clicking here [].

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 [].

About ACGM

Founded in 1991, ACGM is a boutique investment banking firm specializing in global special situations advisory and investment banking transactions for financial and corporate issuers in the US, Europe, LATAM and the Middle East, closely integrated with a fixed income sales and trading capability.

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