With the Greek drama headed into its final act and Alexis Tsipras stuck between an obstinate Germany and a recalcitrant Left Platform, many wonder if the introduction of an alternative currency in Greece is now a foregone conclusion.
Even if Athens and Brussels manage to strike a deal over the weekend, the country still faces an acute cash shortage and a severe credit crunch that threatens to create a scarcity of critical imported goods.
Amid the chaos, the Greek Drachma has made two mysterious appearances this week (see here [5] and here [6]), suggesting that the EU is on the verge of forcing the Greek economy into the adoption of a parallel currency and while this week’s Drachma “sightings” might properly be called anecdotal, a report from Kathimerini [7] and comments from deposed FinMin Yanis Varoufakis suggest redenomination rumors are not entirely unfounded.
Now, with the ECB set to cut Greek banks off from the ELA lifeline on Monday morning in the absence of a deal, some businesses are mitigating the liquidity shortage by accepting foreign currency. FT has more [8]:
Like many Bulgarians, Kostadin Dobrev, is a regular visitor to the beaches and bars of northern Greece. But this week, the holidaying firefighter immediately noticed things were different. First, the shops were half-empty. Then, even more surprising, he found Greek hotels and restaurants were happy to accept the Bulgarian lev.
As Europe’s politicians prepare for a weekend summit to decide whether Greece can stay in the eurozone, Mr Dobrev’s experience highlights how the old certainties are collapsing. By early next week Greeks could be preparing for life outside the euro and a possible return to the drachma.
Many Greeks in the retail and leisure industry say it makes increasing sense to accept Bulgarian and Turkish money at a time when tourism, the country’s economic lifeblood, is under threat. The tourism confederation said last-minute bookings plummeted 30-40 per cent, compared with the same period in 2014, after Greece imposed capital controls last week.
Athanasos Kritsinis, who runs the Krita chain of supermarkets, said Bulgarians visiting his shops in the northern cities of Xanthi and Komotini were paying in leva.
“There is nothing bad in accepting Bulgarian leva because it is stable and pegged to the euro so why not accept to do business with it? It is legal. There is no reason not to accept,” he said.
Yes, "no reason not to accept." There are however, quite a few reasons for Germany "not to accept" Tsipras' latest proposal and for Greeks "not to accept" a deal that flies in the face of a referendum outcome that's not even a week old.
And so as we kick off yet another weekend where all eyes turn nervously to Brussels on Saturday and to Athens on Sunday, the million dollar question seems to be this: what will the preferred payment method be in Greece this time next week? Lira, lev, drachma, or euro?
