By Raj Sastry '20
For the first time in St. Albans’ history, a team of Form IV students has won the Euro Challenge nationwide competition. The contest, sponsored and organized by the European Union, was founded in 2006 to introduce America’s talented youth to the EU—specifically the socioeconomic challenges that its member nations face. The EU consists of twenty-eight member nations, nineteen of which are joined in monetary union (sharing the Euro as their single currency). This year, the St. Albans team chose the overarching topic of Living with a Single Monetary Policy, and selected Spain as their focus country. At the heart of the team’s presentation was the concept that while in theory a tariff-free sector and a stable currency should mean zone-wide prosperity, some key challenges hold back individual member nations. These challenges stem from the inability to pursue country-specific interest rate policy, and to devalue currency for economic stimulus, policies controlled by the European Central Bank (ECB), rather than national central banks.
After the 2008 financial crisis, the ECB employed several corrective measures designed to aid in the recovery of struggling member nations. Now, 10 years later, countries like Germany have rebounded, sporting some of the strongest economies worldwide. Others, though, haven’t seen such momentous growth. Spain, for example, still lags far behind other EU nations in a host of metrics. This imbalance is especially concerning as the ECB begins to scale back the expansionary policy which, for many countries, has been successful. However, nations like Spain still need these provisions to continue their slower recovery. So, the ECB faces a dilemma: continue to scale back expansionary policy to avoid inflation in strong Eurozone economies or keep them in place to help countries in their slower recovery.
They chose the former, announcing scale backs of expansionary policy a few weeks before the preliminary round. These changes, therefore, mean that it becomes Spain‘s responsibility to use the tools it has to neutralize problems it faces—namely high unemployment and low productivity, not to mention significant budget deficits and unmanageable public debt. After researching for hours, pouring through data, and designing a slideshow, our team—advised by Mr. Ted Eagles ‘54—theorized viable policy proposals and presented our findings through video conference to judges, all of whom were distinguished economists and diplomats.120 teams, broken down into regional subcategories—STA faced competition from DC, Maryland, and Virginia—were whittled down to 25 semifinalists. The semifinal and final rounds took place in New York City, at a satellite location of the Federal Reserve of New York and the main building, respectively.
We had roughly three weeks to refine the script, memorize, and make an even more detailed slideshow. Though time was limited, the team—consisting of Matthew Chalk ‘20, NM ‘20, myself, and Constantine Tsibouris ‘20, as well as Mark MacGuidwin ‘20 and Yash Somaiya ‘20 who were unable to attend due to scheduling conflicts—left for New York on April 25th. In the past, St. Albans teams made it to the semifinal round—meaning they, too, received an all-expenses-paid trip to New York. However, they never progressed past the semi-final found. Naturally, then, we didn’t have high hopes for our study.
The morning of April 26th, we walked from our lodging at the Milenium Hilton—no, that’s not a typo, Hilton misspelled it on purpose—to 33 Maiden Lane, a Federal Reserve office building where our presentation would be observed and questioned by world-class economists, bankers, and journalists. After pleasantries were exchanged and light breakfast consumed, we were brought back to a medium-sized room with a conference table. We sat merely three feet away from the judges. The presentation went remarkably smoothly, as did the Q and A session. The judges actually seemed interested in our policy proposals, and seemed to especially enjoy our slides. Still, we walked out of the room thinking that the other teams probably were just as good if not better.
We were not due back to the official Federal Reserve Bank for some time—lunch was to be served for all teams, then the finalists announced—so we had some time to explore the city. Thanks to Mr. Eagles and Mr. Carlos Larreategui ‘12—employed at J.P. Morgan Asset Management—we were given an exclusive tour of the New York Stock Exchange floor, a space off-limits to the general public. Mr. Pete Castelli, a broker on the floor and friend of Mr. Larreategui, showed us the ropes with some real-life trading orders. Needless to say, a once-in-a-lifetime experience.
Finding our way from Wall Street to the Federal Reserve Bank was simple enough, and before we knew it, we were listening to a series of long speeches given by diplomats about the EU—after all, we were a captive audience. Finally, the five finalist teams were announced. We were—to our excitement—selected, presenting second of the five teams. After some brief celebrating, we ran the script one more time, and about a half an hour later, we gave our thoughts on Spain‘s challenges under the single monetary policy and our policy solutions to alleviate them. The judges were much more reserved, showing no noticeable signs of like or dislike, approval or disapproval. We were clueless as to who would win what place. Nevertheless, we were happy to get that far.
After a quick walk to the hotel to pick up our luggage, we made our way to the headquarters of Moody’s Financial, who provided monetary support for transportation and cash prizes. After more speeches—one was by the EU ambassador to the US—the final rankings were finally revealed: we had won first place. Our group of four people—everybody else had five members—had managed to win. Sometime in June, we’ll receive our cash prize ($1250 per person) and a free trip to, of all places, Washington DC. Thanks to Mr. Eagles, Dr. Chalk, Dr. Tsibouris, and Mr. Ethan Goebel for their invaluable support and guidance in this enterprise. Though previous years haven’t been quite as successful, it is clear, then, that the future of the St. Albans Euro Challenge program looks bright.