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Greece Preparing "Alternative Currency", Kathimerini Says
On Tuesday, Latvia’s central bank chief Ilmars Rimsevics called the introduction of a new currency in Greece the “most realistic scenario.”
The country is in its second week of capital controls and banks remain shut in the wake of a referendum which saw some 61% of Greeks vote against the terms of the latest bailout deal proposed by the troika.
Now, Germany has indicated that any new proposal will come with harsher terms to reflect the recent deterioration in the Greek economy. Furthermore, Berlin’s stance on debt writedowns for Greece (which the IMF deems necessary if Athens is to return to fiscal sustainability) has hardened, meaning it will now be exceptionally difficult for Tsipras to fulfill the implicit promise he made to his people when he campaigned for a referendum “no” vote.
Given all of this, it now appears increasingly likely that Greece will be forced to return to the drachma or will at least be compelled to issue some manner of scrip in the face of an acute cash shortage and a worsening credit crunch which together threaten to leave government employees in the lurch and cut off the flow of imported goods.
Sure enough, Kathimerini says the Greek government is indeed preparing for the launch of an “alternative currency.” Here’s more (Google translated):
In full preparedness is the government the possibility to require the use of a parallel currency euro.
According to reports, the Ministry of Finance of the parallel currency design process has begun and left deliberations these days with lenders about whether it will require the implementation of that measure. By today's standards, government funds fail to service the obligation to pay wages and pensions at the end of the month.
According to reports, the first half of the salaries of civil servants (about 300 mil. Euros) is no way to cover euro. In this regard, the Deputy Finance Minister D. Mardas assured that payment of a fortnight is secured. However, today nobody can assure that it is also guaranteed the payment by the State of about 2 billion. euros at the end of the month for salaries, pensions and subsidies to social security funds.
Apart from the apparent lack of liquidity on wages, the state can not serve longer and pensions.Every month, for the payment of 4,551,074 pensions (information system data "Sun" for May) required 2.3 billion. Euros, of which at least 850 million. Euro is direct government funding. Under these difficulties, many are those who have suggested for months the possibility of a parallel currency use.
This comes on the heels of a story run by The Telegraph which suggested that the resignation of Yanis Varoufakis was directly related to comments the former FinMin made regarding the government’s preparations for the introduction of a parallel currency.
Not surprisingly, the Greek finance ministry has categorically denied the Kathimerini story calling it “completely unsubstantiated.”
Ironically, the notion of a Greek redenomination may indeed be “unsubstantiated” — just not in the sense suggested by the finance ministry. To let Credit Suisse tell it, a return to a “shiny new devaluation mechanism” is simply a “pipe dream.” As a reminder, here is the bank's take:
We again want to be clear: “leaving EMU” is not a policy choice and, if enforced by referendum, materially reduces Greece’s freedom of action. Introducing a new currency is a pipe dream and the likely result is a broken financial system reliant on a neighbor’s currency (the euro) and banking system..
This is the nature of “Grexit”; it is not a choice to circulate a shiny new devaluation mechanism, it is a decision to reject the (local, to begin with) financial system and start again.
We have always pointed out that the new “currency” mismatches involved in any attempt to exit the euro would be so "toxic" for the banking system as to make it not a practical alternative.
And here's Reuters with more on the 'California' option:
Yannis Varoufakis, who quit on Monday as Greece's finance minister, [suggested] that Athens might issue IOUs like the state of California did during a budget impasse in 2009, could amount to the same thing.
Facing a massive budget shortfall, California's then governor Arnold Schwarzenegger issued more than 300,000 IOUs, known as warrants, with a value of almost $2 billion, to pay taxpayer refunds and others due money from the state.
After a few months, the state struck a new budget deal and started to redeem the notes. But unlike California, Greece cannot fix its financial problems simply by passing a new budget; if it issues IOUs, it could probably redeem them only if it receives a future international bailout. Otherwise, the warrants could turn into a permanent parallel currency.
"There was never any possibility that California would leave the dollar. It was more a way to replace bonds and financing on the market than to replace a currency," said Gregory Claeys of Brussels' Bruegel think-tank.
"In Greece, it's a different issue. Once they produced these IOUs there would be no turning back. It would de facto end up in Grexit."
Although the Greek government appears not to have planned for a parallel currency, officials both in Brussels, home to the European Union's executive, and Frankfurt, headquarters of the European Central Bank, believe that it could happen.
In case all of the above isn't clear enough, we'll leave you with the following bullet points (once again from Credit Suisse) which paint a rather grim(bo) picture of the redenomination endgame:
- Countries don’t leave the euro.
- If countries try to leave, or show signs that they might, the euro leaves them first.
- To avoid getting trapped, devalued or defaulted.
- A liquidity crisis occurs and domestic liabilities are replaced by foreign ones that cannot be redenominated. So on exit a solvency crisis appears certain.
- As “the euro leaves”, it takes the country’s banking system, and country’s credit, with it.
- So a Greek “failure” would mean sovereign and banking sector default more than it would mean a new currency, we think.
- If it decides to default systemically, the Greek state could pass a law (illegal under the EU Treaties) converting domestic assets and liabilities to new drachma (GRN).
- This would presumably make the Bank of Greece insolvent (GRN assets and foreign EUR liabilities).
- So at the national level there would be a default on the intra-Eurosystem liabilities as well as government debt.
- It would be challenging to settle money electronically, but the effect would be to convert the balance sheet of Greek banks into a new unconvertible currency which would trade, if at all, at a discount to the euro.
- The government would have large unresolved euro debts. How it could re-establish its credit, and so recapitalise the banking system without foreign assistance, is unclear.
- The core expectation would be a “broken” banking system paying out on deposit guarantees through the GRN.
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Will it be backed by Ouzo?
Greek currency. LMAO
Whisper rumor Greece is minting gold coins with engraved image of John Stamos or Zach Galifianakis on them.
Should call it the "Gyro"
If Tsipras caves to the EU, they will be in the streets tomorrow protesting their big, fat Greek betrayal.
Watched a Greek porno the other night- there was no money shot.
<--- The 'Drachma'
<--- The 'Fuck the EU'
I like both of those.
Greece should just leave the Euro and go back to the Drachma. It will be for their own good long term because staying in the Euro doesn’t solve any of the structural issues Greece faces. By going to the Drachma, the Greeks will endure some short term pain, but I am sure many people around the world will flock to buy the cheap Drachmas to have a chance to go to Greece on vacation. Tourism was always Greece’s specialty and I am sure the Greeks will eventually solve their way out of this mess in due time, without having the EU/ECB/IMF watching over their backs.
GrekCoin! A digital "currency" that people carry on their phones until their battery dies.
Expect hipsters to bid each up from $0.01 to $1200 over the next few months then insist that it's the best "money."
Greek BRICS coin.
Awesome, but serously nationalize the banks, Gold / Silver / olive oil backed currency = freedom.
Did they light the cheese on fire though?
Regardless, if a parallel currency is indeed issued in the days to come, then Greece will be well on its way out of the Eurozone.
Should call it the "Gyro"
More like... the "Gypo"
Naa, the "Pikey"
Well played, sir!
They should put Mr. Panos on it.
has been denied already:
no own currency, stay in Euro
but backed by Ouzo would be a good idea
latest:
https://tersee.com/#!q=greece&t=text
If it's been denied already, then it MUST be true.
Greece's debt crisis has hit tourism, with last-minute bookings falling sharply, although the impact on the industry may be limited because the flare-up has come late in the season when most summer holidays are already…
I'll second that motion.
All in favor, say aye!
aye
Aye
Very funny, but... Greece can (and probably should) issue the Greek version of MEFO Bills or OEFFA Bills.
Would look good on the Germans, as would the historic irony -- Merkel bitch!
That way, the penis-sucking Speculator smegma scum won't be able to short the currency so fast. If it worked for Hitler/Germany, it can and will work for Greece.
LOL, I call dibs on the first 100 trillion Greece bank note! I'll bid one shiny US dollar for the privilege. Ok, ok, make it $2 just for the lulz.
Gyros and baklava
"Will it be backed by Ouzo?"
Listen up, you pseudo Libertarians, with your smarmy, narcissistic comments... Greece is the first Western country to return to a genuine Free Market Economy, with -- gasp! -- Price Discovery.
Remember that one vaguely: "Price Discovery"? You got that in 'Merica? No? Then STFU!
They will 'back' it whatever TF they want to -- including Gold, Produce, Tourism, Shipping and whatever else they want to. The point is, they'll back it with real assets (precious or not). Like water finding its own level, so will Greece and its Drachma.
Go Greece! Opa!
Amen brother.
toilet paper > drachma
You need to find new heroes, not these commie fucks. https://en.wikipedia.org/wiki/Syriza
... looks like more dra(ch)ma to me ...
Maybe if they stopped breaking dinnerware they'd be able to save a few drachma.
... this dinnerware diplomacy could be a plate-smashing success, Opa-Greek-style ... and then, of course, 'China' crashes ... ;)
Krugman style economy- just keep breakin shit.
This would have been a good idea....about three months ago.
But I thought they'd caved? If they've agreed to be debt slaves (granted, at least partly their own fault - nobody made them borrow all that money) don't they at least get enough scraps to avoid catastrophe?
NYSE Suspends Trading in All Securities
http://www.bloomberg.com/news/articles/2015-07-08/nyse-suspends-trading-...
Damn communists! Oh wait, wrong country..... Damn fascists!
Gold +7.90
Get a grip. $1160? Whoa, better buy it, before it explodes to $1800.
http://www.kitco.com/charts/livegold.html
The first guy loses in this game....that currency they give you today will be worth 50% by tomorrow...
That will keep speculators away. Bonus
vai....
or is it oxi?
Picture Greek people raising a middle finger to a photo of Merkel with a Hitler mustache
Yes it's the only answer, also one that can quickly be copied by all the PIIGs.
They might even denominate in dollars rather than Euros. Or in reminbi. Or rubles.
They should just issue it online.
Let everybody print as much as they need.
Save alot in tooling up costs.
OR they could simply adopt the olive leaf as legal tender...
wtf is a parallel currency.
Imagine two currencies plotted on an exchange rate chart...the one that's 40% below the other is the parallel currency.
Q: wtf is a parallel currency.
A: it means you keep your savings in euros but get your next wages in drachmas. Since your employer can not lower your wages (bad psychology or even prohibited by law) in nominal terms it will be lowered by the virtue of inflation
wtf is a parallel currency.
EuroAlt, it can be used to pay past debts.
Why is this not getting any playtime here? http://gawker.com/leak-american-police-bought-spyware-from-sinister-ital-1716246425
Great, vacation in Greece this year.
Fat, rich, defenseless tourist with lots of money in an enraged broken country that blames foreigners for all its problems?
Sounds fun.
the mechanics of leaving a currency union, despite what those bankers in the article say, aren't that different from exiting a gold backed system and "going fiat"
the main function of a currency, from the point of view of the state and it's servants, is gathering taxes
and this is also the main support for a new currency: ordinary citizens and companies need those tax chits in order to pay taxes
the usual way of doing such a move is btw a "corralito". in this case, the very first anchor of a possible new Drachma would be the EUR itself, particularly if the Greek gov forces a conversion of all EUR accounts into Drachmae
so the first main FX reserve of the national bank would then be the EUR
but... why do I even mention that. the strangest thing for me in the last months was to find out how little Austrian School thinking is here on ZH, and how little interest in anything related to monetary history
in other words: are you a "goldbug" of the kind hoping for a true gold standard? if yes (and this does not apply to many, here), explain to me how this same crowd battling the EUR would act towards such an even more unflexible currency like gold. then the issues are related, and Neo-Keynesians abhor both, though gold even more
today, the British Chancellor (that's the FinMin) presented a (theoretically-in-the-future) balanced budget. in other words, the "firm" committment to a series of balanced budgets that are supposed to bring debt down by simply refusing to let it grow. the historically most fruitful way to fight debt, bar defaults, of course (another anathema, it seems)
but of course at the moment - as always, actually - there is that little issue with the stock markets. there is always that little issue with the stock markets, isn't it so? TARP and TALP, and back to square one
Gold backed currency restrains Gov't growth and spending. You simply cannot barrow indefinitely, it restricts lending and forces efficient resource allocation. A bank cannot simply print money to lend at interest, it must have the deposits. Or so I have been told.
But it's technically and mathematically impossible to pay off fiat debt. Fiat money is loaned into existance , the only way to pay any debt off is for more fiat to be loaned into existance which starts a perpetuating cycle , once you factor in compounding interest , debt reduction is impossible. If you do manage to pay debt off , that shrinks the economy by the same amout that is paid off , making it even more imossible to pay off any of the compounded interest. The only way to end this cycle is hyperinflation or default , there is no other exit. Gold restricts the amount of new money which can be created , plus it does not exist as debt. However gold introduces a whole new set of problems of it's own. Which is why I beleive bitcoin is a very elegent solution to this problem. First it does not exist as debt because it is not loaned into existance , it features all of the positive attributes of the gold standard (a limited , predictable supply curve) , none of the negatives (re-hypothecation is impossible) , plus the best attributes of the tally stick system which functioned extremely well for over 700 years. At the end of the day , money , gold , derives it true value from it;s ability to act as an asset / value register. Enter bitcoin, the Jet Engine of money.
"technically and mathematically impossible to pay off fiat debt..."
the whole math of the impossibility of paying back fiat debt is always contingent on not entertaining the notion of... defaults
A few years back I was in China and I bought a $5T zimbabwe dollar note for about a buck. I asked the guy if it was fake and he told me the fakes cost more.
Back the New Drachma with Chinese Equities...what could possibly go wrong?!
the madderness continues unabated ...
100,000,000,000 drachma = 1oz of gold ....
few oz's gold = a big fuckin villa in santorini....
Villa in Greece anyone??
www.teamramgold.com for small weight gold bullion
Greece could approach the BRICS and they take the new Greek currency in exchange for BRICS currency then pay whatever needs to be paid. In exchange for this Greece joins the BRICS.
Dup
are they backing it with anything? wtf greeks
Antikithera mechanisms
Zimbabwe all the way babay!
Need a money printing, Zimbabwe song.
Somewhere in Europe:
Wife: Look, I'm warning you! I've got my bags packed and I'll leave if you don't pay my credit cards.
Husband: Go on then, see if I care. I've been expecting this and I'm well prepared for your absence.
Wife: You've been abusive ever since I've known you. The whole world knows it you controlling bastard.
Husband: I've been nothing but generous all these years you bitch and all I ever asked you to do was look after our household budget. Not go around sucking Mr.Goldman's cock to get him to lend you more money.
Wife: That's rich considering you work for Goldman! I did it for our future and you positively encouraged it you hypocrite.
Husband: Bitch! Why can't you do as I say?
Wife: Bastard! I'm leaving now, I mean it.
Husband: I'll go and pack your bags shall I?
------ Six months later------
Husband: Where's my dinner?
Wife: It's in the dog.
(The moral of the story? It's bloody hard parting ways after you marry but delaying the inevitable divorce is agony for all concerned). Fuck the IMF. Fuck the creditors. Just leave the control freak before you go insane. It'll be hard at first but you'll survive, Athena.
Dupe
If Greece had prepared an alternate currency in the last two months, they would be in a much better position today. Now it is more austerity and more pain and more debt.
"Your papers, please".
Reality: https://i.imgur.com/MBlS7Wr.gif
Varoufakis bucks.... You only need 2,000,000 to buy a loaf of bread. Eat your heart out Zimbabwe.
Way to go: Zimbabwe inflation at its peak
"Furthermore, Berlin’s stance on debt writedowns for Greece (which the IMF deems necessary if Athens is to return to fiscal sustainability) has hardened, meaning it will now be exceptionally difficult for Tsipras to fulfill the implicit promise he made to his people when he campaigned for a referendum “no” vote. "
But..But... Godverment can make anything happen with a majority vote?!
There's no reason why people can't vote themselves generous retirements and productivity-bereft public-sector jobs indefinitely without consequence??
EVERYONE HAS TO PAY US? WE VOTED FOR THEM TO PAY US! AND NOW THEY MUST PAY US!
WHAT DO YOU MEAN THEY CAN SAY 'NO'? DIDN'T YOU HEAR ME? WE VOTED FOR MORE O.P.M. (Other People's Money)!!!!
Suddenly bitcoin looks stable.
1. Default and leave euro.
2. Cozy up to the Russians and Chinese.
3. Reapply to join euro in 5 years.
Tsipras got owned by truth:
https://youtu.be/P84tN0z4jqM
There are 4,551,074 pensions out of a population of 10,767,827* ? WFT !
*2012 figure - http://worldpopulationreview.com/countries/greece-population/
I saw that too. However, over on another thread, I saw some figures for people drawing four, five, or even more pensions at a time so the number is slightly divergent from population.
But still...
Oh, well that makes me feel better about that number..
Fine , start concentration camps & gas them, revive the economy.
Can you.
How do you like it if , after retirement , all you get is death by govt , because you are no longer useful.
Kaputniks, price everything in kaputniks!
On Tuesday, Latvia’s central bank chief Ilmars Rimsevics called the introduction of a new currency in Greece the “most realistic scenario.”
Replacing one mis-managed Medium of Exchange (MOE) with another mis-managed MOE does nothing. It's as silly as splitting bank liabilities into good bank/bad bank entities.
But the Greeks can't institute a properly managed MOE without scuttling their government (i.e paring it down to what people are willing to pay for in taxes alone). If they were willing to do that, they wouldn't be in this mess in the first place.
Issuing their own currency for the sake of printing their troubles away is hardly an elixir for what troubles Greece most. Greece's number one problem aside of debt is generations of Greeks ill-equipped to compete for business in the world. Sure, leaving the EU will see Greece become a cheaper labor haven in Europe. But you still have to find people more interested in work than protesting which is difficult in Greece. Add to that, the current regime is more inclined to continue down the path of nationalizing even more industry even though that's entirely counter-productive to becoming a competitive nation. But leaving the EU will be a good thing overall. The hard lumps Greeks will experience may bring a paradigm shift in atitutdes among the working population that would never happen so long as they are getting bailed out in the EU.
Problem is that 7% of Greece's residents are not even Greek. Further, bad as it is, Greece still looks more prosperous than many MENA locales. Inflow of the poor and unskilled will continue. Gonna get a whole lot worse before it gets better.
I cannot believe that Greece let it go this far without having a plan A, B and C in place.
If they do issue a new Drachma, they should use the image of Yanis giving the bird.
I shall presently issue a fiat prediction in lieu of a real one -- It will NOT be backed by my reputation in any sense. (Because my predictions have a 90% chance of being wrong.)
We are about to experience a disguised comedy, discernible only to the hip. The big Euro-deal vote has created an international political crisis. Now that the West has deliberately transformed the East into an adversary, we a back to where our imperial overlords must deal with an alternative open to those it oppresses. They woke up to a world in which the president of Greece might perhaps be making yet more journeys to Moscow. Tiny Greece is just an experiment prior to financial attacks on Italy, Spain, perhaps even France.
It failed disastrously. So now, since we can't have these nations leaving NATO, we will be treated to a disguised comedy, kabuki style fake show, with all the trimmings. They will mortgage the City of London to keep Greece in the fold.
We will see giant economic threats but no real change in Greece, in tandem with the sudden emergence of the most wonderful "deals" for fine cheap Greek vacations all over the West. Complete with a hooker circus that will put the Netherlands to shame.
In six months the Greek drama will be forgotten. Such is my fiat "prediction."
Is Credit Suisse brain dead????? They are farking insolvant you bunch of clowns.
But most of these so called experts are morons anyway, so why listen to them.
Drachma here were come!
Greece cannot change its pension system overnight even if it could get the population to agree, which is a non-starter. Best case is to pay these pensions in Drachma (pegged 1:1 with the Euro) and allow the market to set the value of this new currency. As younger retires find their pension decilining in purchasiing power, they may consider working again
If 4million greeks are gettting a pension or some form of social security from a country with a population of 12million something is very wrong. Yes there is high unemployment and that is the first issue to tackle.
Jobs, somehting a devalued currency would help.
A trial run for an SDR backed counterfeit, I mean, currency?
We'll see.
Liberty is a demand. Tyranny is submission..
Zion can't let Greece escape the plantation. So Greece will get half of its right foot cut off.