A new election looms, with the possible reintroduction of the drachma to follow
How would Greece leave the eurozone?
Greeks go to the polls again on 17 June after the vote on 6 May proved inclusive. The new election is seen as a referendum on the euro. If the anti-austerity Syriza party wins control and cannot force Germany to relax its opposition to lower and slower cuts, there may be no option but for Greece to leave the eurozone – or be kicked out.
So it’s down to democracy then?
Not quite. If outflows from the Greek banks continue at this current pace then the instability could force Greece out of the eurozone before the election.
What would happen if Greece left?
It would have to be carried out almost overnight – most likely over a weekend. The banks would have to shut their doors, bank accounts would be frozen and capital controls imposed to stop any more money leaving the country. The new currency would be likely to lose at least 50% of its value relative to the euro so any saver in Greece who has left their money in a bank will instantly find it is worth considerably less. Opinion polls show that while Greeks do not want austerity, most of them want to stay in the euro – which explains why savings are still sitting in Greek banks.
What will the new drachma look like?
Unless a load of forgotten drachma are found in a vault, Greece will need to print a new currency. It is possible that the authorities have thought ahead as Slovakia did when it split from Czechoslovakia in 1993, printing a new currency and hiding it away in London until it was needed. A more likely option could involve tweaking euros already in circulation in Greece. Some suggest a D could be emblazoned across euros, while others suggest corners could be clipped off. It would also need a new symbol for currency traders on the money markets. Before the euro, the drachma was known as GRD and by the numeric symbol 300 for international trading. The financial markets – and their computers – would need a new symbol for the currency quickly so that it could be traded.
Would it only have an impact in Greece?
The key question and hardest to answer. It could cause mayhem, just as the collapse of Lehman Bros did in 2008: sparking a wave of market panic and the biggest global recession since the 1930s. Marchel Alexandrovich, of Jefferies International, is so concerned that he reckons Greece should be “persuaded and paid to stay in the euro, which would much cheaper than the alternative”.