Greece without euro

Unkind rumors about the possible exit of Greece from the euro zone forced us to write a scenario of how this way out could take place. Without dwelling on the legislative procedures necessary in this situation, we will only show the mechanism of transition from one currency to another, as well as the possible consequences of such a decision.

In this case, one must mention one important circumstance. This kind of transition is a well -known and widespread thing in the history of world money circulation. But, as a rule, when this or that country passed to the new currency, it hoped that its monetary and financial systems would strengthen, and the general state of affairs in the economy would improve. Unfortunately, in the case of Greece, there is no need to talk about this kind of calculations. It is clear that if there is a replacement of the euro with a drachma, then the already non -brilliant position of the country's economy will become even worse.

And the hopes that after receiving the monetary management tools (which are now in the collective management of the European Union), the Greek leadership will be able to correctly rectify the situation, are groundless.

So, if the authorities of the European Union decide on the exclusion of Greece from the euro zone, then what events should the Central Bank of Greece take place with commercial banks and other financial structures of the republic?

Firstly, banking and financial structures should recalculate the remnants of funds in the accounts of individuals and legal entities opened on their balance sheets from euro to drachma.

Secondly, the Greece Central Bank should order the required number of banknotes nominated in drachmes to replace them with cash euros.

Thirdly, all economic agents of the non-financial sector, private and state, will be necessary to recalculate their balance sheets from the euro to drachma.

Fourth, the securities of Greek issuers (including state securities) should also be converted into drachms.

Fifth, prices for all goods and services sold in the republic will now be indicated in Drachm.

After these technical procedures, the formal exit of Greece from the euro zone will be completed. But, of course, in the process of this exit, some informal complications will arise.

The first complication is the course according to which the money of Greek residents should be recalculated. It would be very reasonable from the Greek authorities to count the money residues at the rate of 1: 1. Then, formally, the property rights of the owners of these residues will be protected. But in fact, as we understand, it will be almost impossible to preserve this course in the future. Any Greek government will probably go into all the heavy ones, and will emit the national currency on a very wide scale, which will lead to its inflation and devaluation. And then

The monetary residues, albeit recalled at a “fair” rate, will be very quickly depreciated and their owners will suffer significant losses.

It would be much better to recalculate a different, less fair, but more adequate course, but such a scenario is difficult to imagine, especially taking into account the current political situation in the republic.

The second complication is that the mechanism of transition from the use of euros to the use of drachma is incomprehensible. So, an instant transition mechanism can be used, when the Central Bank and Greece government announce the day during which measures should be carried out to recount funds in the accounts and exchange cash marks.

A gradual output mechanism can also be used when the withdrawal from the euro circulation and its drama replacement is carried out at different times for different units of the money supply. That is, for example, funds on deposits and current accounts are recalculated into drachms at once, and banknotes are replaced by the course of several weeks, say, as wages and financial transfers to the Greek residents. Then, during the “transition period”, the pan -European and Greek currencies will turn in parallel, that is, trade and the service sector will receive both currency, and prices will also be nominated in both currencies.

A completely preferential mechanism for leaving the euro zone (if there is a good EU will), when the monetary residues in the euro belonging to the Greek residents who already exist on a certain date will not change, and will remain nominated in the euro. But after a certain date, all payments and receipt will be made only in drachmas. This mechanism is the most sparing, especially since there are no problems with its use with the Euro recalculation course in Drachma.

The third complication is caused by the fact that a significant part of the Greek securities belongs to non -residents. If these papers are converted from euro to drachma, then their owners will suffer heavy losses when, having received coupon payments or the amount of repayment in Greek currency, they will try to convert it into some international currency. By the way, non -residents - the owners of the Greek bonds - have already suffered losses, agreeing to a partial write -off and restructuring of Greek public debt. But here they at least retained the previous currency of the duty and, accordingly, the cost of their Greek assets. But if they are replaced by bonds nominated in the euro with bonds nominated in drachms, then the loss in the cost will be giant.

And the fourth (although probably not the last) complication is that

Replacing the euro with a drachma for the economy of the republic will give little.

Greece is so well inscribed in the world market that it almost completely depends on its hesitation. The domestic production and domestic market of Greece are so small that no stimulating measures that give an effect in the economies of Germany, France or Great Britain will not appear here.

Therefore, most likely, any Greek government, after avoiding the euro, will use the possibility of a practically unlimited issue of national money to simulate a solution to social problems. However, unlimited distribution of money will not solve any social problems, but will create new ones that will be caused by constantly swelling inflation.