Greece leaving the EMU: how would it work?

While it is possible that Greece (and other PIIGS) remain in the EMU, it's also possible that they leave it.

So I'm wondering how would this work in practice? For example, if Greece were to leave, presumably they would go back to the Drachma. However this wouldn't happen overnight for various reasons, including but not limited to printing and producing paper notes and coins.

Apart from the multi-year changeover to the Euro in the late 1990s and early 2000s, are there any other precedents for a massive change in currency, particularly where it happened quickly?

How do you think it would work if Greece or another PIIGS left the Euro?

 

Well, the first thing to mention would be that, apparently, it's illegal for a country to unilaterally exit the EMU. This is a view that's was formulated by the ECB legal counsel, Phoebus Athanassiou, in this working paper (I think I have posted a link in another thread a while ago):
http://www.ecb.int/pub/pdf/scplps/ecblwp10.pdf

 

thanks for the paper.

 

Second thing to mention is the comback of the Greek Drachma, or ?



Different point is to formulate a "value" for any sort of "New Greek Drachma"...

 

the best printing press machinery is made in Germany. the german exporting juggernaut is ready.

 

Here is a piece of Deutsche Bank Securities WHY actually the Greek crisis accelerated sharply after March 25th :

http://www.cre.db.com/sites/default/files/docs/research/acceleration_greek_gredit_crisis_2010-04.pdf

 

How about Germany going back to the Deutche Mark and shaking off those spungers.

"The problem with socialism is that eventually you run out of other people's money [to spend]." - Margaret Thatcher

 

because of german history it is not possible. most others will leave. a mechanism will be created for leaving. .the euro will remain for the few who don't leave.
my prediction is that Iceland will get its act together and align with the remaining members.

 

isn't the situation that Greece and other PIIGS can't be allowed to leave because of
the debt chain ?

don't they All - whole EU have to rise/fall together because of their incestuous debt
lending ?

Greek leaving would automatically mean debt default and the debt house of cards
crashing

 

Indeed, and while debt chains between Greece and the rest might be labeled as controllable, those between core nations certainly can not as they amount to trillions of USD.