http:\/\/www.economonitor.com\/dolanecon\/2011\/11\/20\/on-technical-barriers-to-leaving-the-euro-and-learning-from-others\u2019-experience\/<\/p>\n
An interesting group of thoughts about the consequences of a European breakup. The author warns of the danger of “evergreening” – the idea that even though you know the country is incapable of paying its debts, each time the country can’t pay the interest, you loan them more money to pretend that the country is still meeting its obligations.<\/p>\n
The flaw with this article is it is thinking in the framework of the 1950s. With today’s electronic payment systems, coins and paper currency are a very minor part of a country’s “money supply”. If Greece were to drop out of the Euro, what would happen to the Euros owned by Greeks stored in banks in Switzerland? What would happen to a car loan owed by a Greek person but borrowed from a bank in Belgium in Euros? Or plane leases on the planes flown by Iberian?<\/p>\n
Greek may well have to create its own currency, but realistically the country cannot stop using the Euro unless the Euro itself becomes less viable than a Greek Drachma, which is not yet on anyone’s radar<\/p>\n","protected":false},"excerpt":{"rendered":"
http:\/\/www.economonitor.com\/dolanecon\/2011\/11\/20\/on-technical-barriers-to-leaving-the-euro-and-learning-from-others\u2019-experience\/ An interesting group of thoughts about the consequences of a European breakup. The author warns of the danger of “evergreening” – the idea that even though you know the country is incapable of paying its debts, each time the … Continue reading