Square in a circle in a square

What is the ratio of the areas of the squares in the diagram?
Exploring and noticing Working systematically Conjecturing and generalising Visualising and representing Reasoning, convincing and proving
Being curious Being resourceful Being resilient Being collaborative


In the diagram, the circle touches every edge of the larger square and every corner of the smaller square.

Image
Square in a circle in a square


What is the ratio of the area of the smaller square to the area of the larger square? 

This problem is adapted from the World Mathematics Championships