If Greece does go Bust?

wymondham

AndyGuil wrote: »

Correct. You can find out the country designation for all notes, they are all different.

Hope this helps??

Country Letter
Belgium Z
Germany X
Finland L
France U
Greece Y
Ireland T
Italy S
Luxembourg (R) **
Netherlands P
Austria N
Portugal M
Spain V

Letters reserved for future Euro-countries:
Country Letter
Denmark W
Great Britain J
Sweden K

AndyGuil

wymondham wrote: »

Hope this helps??


Letters reserved for future Euro-countries:
Country Letter
Denmark W
Great Britain J
Sweden K

Haha!

Thanks for the list, the reserved list made me laugh. Wishful thinking.

pqrdef

Currency is an almost entirely separate issue from cash. As already pointed out, most of the money is not in cash. Personally I hardly ever use cash - I doubt if £50 has passed through my fingers in the last 12 months. The amount of cash in circulation is enough for day-to-day payment needs. It's a drop in the ocean compared to what would be needed for people to take suitcases to the bank and empty their bank accounts.

And changing to a different currency, where the new one is issued by a different central bank and floats against the old one, is totally different from a re-denomination exercise, where the unit is changed, with a fixed conversion rate.

A currency can be "changed" just by inroducing the new one alongside the old one and taking steps to encourage its use. Though ultimately you can't stop people using the old one, if it still exists as a foreign currency.

Much more problematic is the rewriting of contracts. If I've got a bank account, I haven't really got money in the bank. I've just got a loan contract which says that at the appropriate time the bank will repay the money I've lent it, generally in the same currency.

There's an idea that an act of government could rewrite all these contracts overnight, so that my 1000 euros might become repayable as say 5000 drachmas.

Of course, I could then go to the bank and buy foreign currency, e.g. euros, in the normal way - but at the market rate. So if the market rate is 10 drachmas to the euro, my money (once 1000 euros) will only get me 500 euros, less commission.

But there are massive problems with all this, because people will have signed contracts to pay for things in euros, and will no longer have the money.

However, there would be no need to do anything about euro notes in circulation. They would simply become foreign currency.

Of course it would be convenient if the new Greek central bank, having created the drachma, were to issue some drachma notes at some point. Any bits of paper will do, but it's better to have some anti-counterfeiting features. Apparently the quick way to get that would be to overprint old banknotes that have been withdrawn. These would be notes that have been paid into an account at the central bank of issue and demonetised, i.e. the IOU has been redeemed, so now they're just bits of paper that look like banknotes but aren't worth the paper they're printed on. In principle they could be overprinted with any value and issued by any central bank as new IOUs. The new value needn't have any relation to the old value.

The Greeks wouldn't be able to withdraw euro notes, only the ECB could do that, but they could in theory get hold of some overprinted ex-euro notes to issue as temporary drachma notes. But that would be the worst idea, because they would too easily get mixed in with real euros. Better to get something more distinctive. Maybe the Chinese could sell them some overprinted yuan.

tomterm8

pqrdef wrote: »

But there are massive problems with all this, because people will have signed contracts to pay for things in euros, and will no longer have the money.
.

It's not that hard. I can write a law to do that in, say, ten minutes.

The Greek (Conversion of Contacts) Act.

S1. The Legal Tender of Greece is the NeoDrachma.

S2. On DATE, all existing debts of Greece or any citizen of greece or legal person resident in Greece Shall be Converted from
Euro's to NeoDrachma at the rate of one NeoDrachma to One Euro.

S3. On DATE, all existing debts owed to Greece or any citizen of greece or legal person resident in Greece shall be Converted from Euro's to NeoDrachma at the rate of one NeoDrachma to One Euro.

S4. All debts owed by any Greek person denominated in Euro's (whether Legal or Natural Born) to any other person foreign or domestic shall be converted from Euro's to NeoDrachma at the rate of One NeoDrachma to One Euro.

S5. It shall be illegal to refuse NeoDrachma in payment for any debt, civil or criminal, incurred before this law came into force. The penalty for refusing shall be between five and fifteen years in prison.

There. For a sovereign government, that is not too difficult.

pqrdef

tomterm8 wrote: »

There. For a sovereign government, that is not too difficult.

You can only go so far. Wherever you stop, bankruptcies all round.

tomterm8

pqrdef wrote: »

You can only go so far. Wherever you stop, bankruptcies all round.

The thing is, bankruptcy, money and debt are established by law, they are not natural processes.

The above law is damn near a copy of the law they used after the German hyperinflation, and it pretty quickly established a new currency. Since then, similar laws have been used time after time.

bobthedambuilder

Tomterm8, your law might work for domestic contracts in Greece, but what about international contracts? You can't impose Greek law on, say, German suppliers, who will still require that, say, Mercedes cars are purchased in Euros. The Greek companies and individuals will have to buy Euros at the market rate using their NeoDrachmas in order to satisfy those contracts. That's how international trade works.

Either that or stop trading with other countries.

AndyGuil

bobthedambuilder wrote: »

Tomterm8, your law might work for domestic contracts in Greece, but what about international contracts? You can't impose Greek law on, say, German suppliers, who will still require that, say, Mercedes cars are purchased in Euros. The Greek companies and individuals will have to buy Euros at the market rate using their NeoDrachmas in order to satisfy those contracts. That's how international trade works.

Either that or stop trading with other countries.

They won't be importing as much goods because their currency will be weakened. This is how it was before they changed to the Euro.

tomterm8

bobthedambuilder wrote: »

Tomterm8, your law might work for domestic contracts in Greece, but what about international contracts? You can't impose Greek law on, say, German suppliers, who will still require that, say, Mercedes cars are purchased in Euros. The Greek companies and individuals will have to buy Euros at the market rate using their NeoDrachmas in order to satisfy those contracts. That's how international trade works.

Either that or stop trading with other countries.

See my post 8 on the thread.

Greece still has her factories, her people and her productive resources. For a time, she would have to balance her imports against her exports. "Greece would go on a cash-on-delivery basis for a time,"

BigGen

If it does go bust, be great place for a holiday The £ should buy a lot of units of whatever currency they go onto next.

How does a country leave the Euro? And how does the change from one currency to another take place?

Will they start with say a trillion new units of account whatever the new currency will be called? Who gets to create this new currency and where does the wealth come from? Or is it just printed out of thin air like the £ and $ and all the rest of them.