4. How to redenominate currencies

A break-up of the eurozone implies a need to redenominate contracts from euro into new currencies. This is relevant for bonds, loans, deposits and other financial instruments.

This process is complicated by various legal constraints. Different financial instruments are governed by different laws, and many euro denominated instruments are governed by foreign laws, especially English laws.

Eurozone governments cannot change laws of foreign countries and they cannot easily redenominate foreign law assets. Since there are tens of trillions of euro-denominated contracts in existence under foreign law this is a very large potential problem.

Our plan stresses the importance of facilitating an orderly currency redenomination process in all break-up scenarios. This includes the need for an ECU-2 currency basket to settle euro claims in a full-blown break-up, where the euro ceases to exist. The ECU-2 would constitute a bridge between the euro (which no longer exists in a full blown break-up) and the new national currencies. The ECU-2 concept would thereby help avoid arbitrary currency conversions and prolonged legal battles about redenomination. In the absence of an efficient process for redenomination, a full-blown break-up of the eurozone is likely to be devastatingly disruptive and could see a complete freeze of the global financial system.

Jens Nordvig

5. Split the eurozone in two to stop currency flight

My approach is designed to allow an orderly transition of the eurozone to two or more regions, and prevent the speculative capital flow, that could force a country out of the eurozone.

These new regions would have their own central bank, monetary policy, and currency unit. All euros would get treated equally and get exchanged for a basket of the new currencies at an agreed and fixed exchange ratio - the paper describes how this ratio gets set. So everyone would receive a basket of the new currencies, and it would be up to them to decide what currencies to exchange them to. The settlement value of existing euro-denominated contracts and debt could be determined by the exchange ratio and the relative value of the new currencies.

Post-separation, competitiveness could be restored by the exiting country or countries managing a gradual devaluation, using higher nominal interest rates and inflation. Higher interest rates prevent a sudden currency collapse and stops currency flight. In addition, any renegotiation of, or default on, debt could be managed quite separately. And, unlike with a crash exit, savers in the exiting countries are not penalised and speculators are not rewarded and the process can allow time for migration to the new currency regimes. Because it reduces the risk of speculative capital flows, the "Newney" approach - New Euro-White (New and New Euro-Yolk (Ney) - could also support the eurozone remaining together.

Cathy Dobbs

Burberry shares fall 19% after profit warning

Shares in fashion house Burberry have slumped 19% after the company issued a surprise profit warning.

The UK group said its full-year profits would now be at the lower end of market expectations due to weak sales.

Burberry said like-for-like sales in the 10 weeks to 8 September were unchanged from a year earlier, and that they had fallen since then.

As a result, it said its annual profits would be "around the lower end of market expectations".

'Not immune'

Burberry chief executive Angela Ahrendts said: "As we stated in July, the external environment is becoming more challenging.

"In this context, second quarter retail sales growth has slowed against historically high comparatives."

A Burberry spokeswoman added that the weak sales had been seen around the world, and were not limited to any specific global region or regions.

Retail analyst Bethany Hocking of Investec Securities said Burberry's trading statement implied "a significant slowdown and Burberry is not immune from wider macro-economic turbulence".

However, she also said that she remained of the view that Burberry would continue to outperform the wider retail sector over the longer term.

Fellow retail analyst Jaana Jatyri, of Trendstop, added: "The global economic crisis is dragging on and the longer it drags on the less confident even wealthier individuals become.

"Unfortunately, people lacking confidence do not shop at Burberry."