Currencies Direct: Drachma Reintroduction Would Take Months of Planning
Currency exchange experts says the reintroduction of the Greek drachma would take months, not weeks, to implement
(firmenpresse) - LONDON, UNITED KINGDOM -- (Marketwire) -- 09/25/12 -- When it comes to tackling Greece's economic future, euro-zone members remain worryingly polarised. While Angela Merkel holds on to the belief that tough austerity can steer any troubled state from the threat of default, there are many European leaders who are simply fed up with Greek fecklessness: calling for the country to leave the euro once and for all, and re-adopt the drachma currency.
Yet if Greece was to leave, experts, Currencies Direct, says the transition from euro to drachma wouldn't be as swift as leaders predict. They say re-introducing the drachma would take several months of careful planning to fully implement; citing the need for the Greek government to firstly design, print and then distribute the currency before 'officially' leaving the euro-zone.
There are other problems too: the government would need to clear many practical and legal hurdles before distribution could begin.
One obstacle involves timing. Any whiff of a Greek exit and panic is likely to spread fast, prompting mass bank runs across the whole country. Of course it would be hard to keep such news a secret, especially when European leaders convene, but if 'Grexit' was confirmed then the Greek government could immediately impose an extended bank holiday, allowing enough time to place the drachma in circulation while markets were closed.
If Greece does leave the euro and re-adopt the drachma, the new currency is sure to devalue the instant it begins trading on markets. This may not necessarily be a bad thing. Currencies Direct says that devaluation could kick-start lost competitiveness and therefore avoid the need for the government to grind down costs over several years- which is part of their bailout agreement.
Legality is another issue.
According to legal opinion published by the European Central Bank in 2009, because European treaties did not conceive the possibility of a country leaving the euro, an exit is technically illegal. This of course favours those lobbying for Greece's continued stay in the euro-zone. But if the Greek government agrees to leave, this odd technicality could delay the drachma's return; leaving the country, potentially, devoid of cash.
About Currencies Direct
Currencies Direct is one of Europe's leading non-bank providers of currency exchange payment services. Since its formation in 1996 Currencies Direct has evolved and positioned from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider.
Head quartered in the City of London (United Kingdom) with operations in Europe, Africa, Asia and the United States, Currencies Direct is part of the Azibo Group, a privately owned investment company.
Contacts:
Currencies Direct
Wendy Mitchell
Communications and Training
United Kingdom
M: +44(0)7880788783
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Datum: 25.09.2012 - 07:53 Uhr
Sprache: Deutsch
News-ID 186264
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