Enlarge Image
Close Bloomberg NewsGoing back to the drachma, Greece's former currency, would be messy.
BRUSSELS—Returning to a national currency after more than a decade of using the euro and having its money managed by the European Central Bank would catapult Greece into a financial, legal and political no man's land.
Countries have defaulted, devalued, or even withdrawn from a broader monetary union in the past. But none has done it all at once—and certainly not an economy so deeply integrated into global financial markets.
Join Our Live ChatWSJ's Charles Forelle, Stephen Fidler and Marcus Walker took questions from readers about the Greek debt crisis on May 17. Read the full transcript.
Greece would have to remake its monetary system and rebuild its economy after a likely sharp devaluation that would have delivered a severe confidence shock to the population, undermined its banks and triggered likely defaults on debts to foreigners.
The consequences of an exit from the euro for Greece and the rest of Europe would likely be so tumultuous that policy makers have been reluctant even to speculate on how it could work. And even though the taboo of mentioning a euro exit has fallen away in recent months, going back to the drachma would likely be messy, with many steps having to be improvised overnight.
No comments:
Post a Comment