A team from Capital Economics, led by Roger Bootle, has won the Wolfson Economics Prize 2012. The Prize, which is the second-biggest award to an economist after the Nobel Prize, sought to find the best answer to the question: "If member states leave the Economic and Monetary Union, what is the best way for the economic process to be managed to provide the soundest foundation for the future growth and prosperity of the current membership?".

• The most realistic scenario for euro break-up is that one or more of the weaker peripheral countries will leave the euro-zone, introduce a new currency which then falls sharply, and default on a large part of their government debt.

• Other forms of break-up are possible but the analysis of these will involve the same issues, albeit, in the case of strong countries leaving, often with the signs reversed. Accordingly, our analysis centres on the departure of a single weak member, and we then note any instance where the issues and conclusions need to be modified for other forms of break-up.

• It will not be possible to be open about preparations to leave for more than a very short period of time without precipitating damaging outflows of money which could cause a banking collapse. Accordingly, preparations must be made in secret by a small group of officials and then acted on more or less straightaway.

• Given the short time from announcement to implementation, it will not be possible to have new notes and coins available immediately when a country exits the euro. This is unfortunate, but it is not as serious as is often imagined. The authorities should allow euro notes and coins to continue to be used for small transactions. But straight after the decision to leave the euro has been announced, they should commission new notes and coins to be produced as soon as possible.

• In order to facilitate the convenient use of euro notes and coins, to help to maintain price transparency and to boost confidence in the new regime, we recommend that the new currency, say the drachma, is introduced at parity with the euro. Accordingly, where a price used to be 1.35 euros, it would now be 1.35 drachmas. Of course, the drachma would be free to fall on the foreign exchange markets and indeed it is vital that it should do so.

• We reckon that if any or all of the weaker members of the euro-zone left, their currencies would depreciate by something like 30-50%. This would probably add about 10% to consumer prices, which, spread over two years, would cause the annual rate of inflation to rise by roughly half this figure. But international experience suggests that such a spike can be short-lived and inflation can then return to something like its previous level.

• Just before departure, some form of capital controls will be essential, including at least closure of the banks. But after departure, capital controls should be avoided and, if used, should be withdrawn as soon as possible.

David Fuller's view This is a sensible programme, designed to prevent a disorderly exit from the euro. However, because such an event will be anticipated, with odds heavily favouring Greece to be first in the queue, what looks straightforward on paper is likely to be considerably more difficult in implementation.

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