"An important point to keep in mind here is that there is no legal mechanism to force Greece to drop the euro and readopt the drachma. Hence the idea of choking off the Greek banking system and forcing the Greeks to renounce the euro versus organizing some type of formal action, such as a vote to eject Greece from the euro, which would not be allowed under current EU law.
But in the event of a full-fledged run on Greece's banking system, where
Greek banks literally have no cash on hand to give to depositors, it
would seem reasonable and (crucially) perhaps legal for the Greek
central bank to start printing euro notes even if the ECB disavows this
action.
If this were to take place is there anything the ECB could do to stop the Greek central bank from printing euros? Probably not.
If this were to take place is there anything the ECB could do to stop the Greek central bank from printing euros? Probably not.
It's hard to imagine the situation reaching a stage where the Greek
central bank openly revolts against the ECB and starts printing euros.
However, Greece need only hint at playing this card for it to have the
desired effect, which is to force the ECB to continue accepting Greek
bank collateral on reasonable terms. In other words, the fact the Greeks
can print their own euros nullifies the ECB's ability to choke the
Greek banking system into submission and force a 'voluntary' abandonment
of the euro."
More on Greece:
"Greece should start to pay half of its civil service wages,
pensions and other expenditures in drachmas now," Dobrint added. "A soft
return to the old currency is better for Greece than a drastic move.
Having the drachma as a parallel currency would allow the chance for
economic growth to develop."
Dobrindt did not explain how Greece could manage a partial return to
its old currency without triggering turmoil in financial markets and a
likely run on its banks.
Oh boy! Where to start? Why would the Greeks want to go back to the drachma at this point in time, where's their advantage in that? And who's going to make them? Why wouldn't they just print euros instead? And not "Greek euros", but German ones (German euro bills have a series of numbers preceded by an "X" printed on them, other countries have a different letter)! Who's going to stop them from doing that? Germany? Really? What's Greek for "bite me"?
--http://theautomaticearth.com/Finance/project-europe-is-over.html
On Spain:
"...what the Bank of Spain does when it extends ELA funding is that it prints euros and not pesetas. Therefore [the] risk [is] borne by all users of the euro, as a future write-off of the assets the BoS gets in return for extending these funds could potentially leave the newly printed money stranded in the economy."
--http://seekingalpha.com/article/821871-it-s-not-just-greece-spain-is-now-printing-euros
Let the printing presses begin! Isn't it fun using someone else's credit card?
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