Mayer: The Euro as a Foreign Currency for Greece

“Key Point” from the author:

In an earlier note, I discussed how a Greek parallel currency to the euro could allow the Greek government to gain some room for manoeuver in fiscal policy while at the same time continuing the adjustment programme demanded by the country’s creditors. In this Commentary, I explore the question of how the Greek population could still keep the euro after a default of its government. Contrary to general belief, Grexit and the reintroduction of the euro as a foreign currency would probably be positive for the Greek economy. Creditors, however, would be hard hit. It is therefore primarily in their interest that default and Grexit are avoided.

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