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Can Greece really make a drachma as a way out of this crisis? Can Greece really make a drachma as a way out of this crisis?
(about 5 hours later)
Greece’s ability to print its way out of crisis would start at 320 Mesogeion Avenue. It is here, behind high walls and iron bars – daubed with the revolutionary graffiti of anti-capitalist leftists – that the country’s central bank has a currency press.Greece’s ability to print its way out of crisis would start at 320 Mesogeion Avenue. It is here, behind high walls and iron bars – daubed with the revolutionary graffiti of anti-capitalist leftists – that the country’s central bank has a currency press.
Set amid pistachio and pine trees, it is here that Greece once printed drachmas, the world’s oldest currency and the one used from its modern incarnation almost 200 years ago until it joined the euro. If a euro exit beckoned, and the legal tender was re-embraced, the printing works in the iron-clad building would start to roll. Set amid pistachio and pine trees, it is also here that Greece once printed drachmas, the world’s oldest currency and the one used from its modern incarnation almost 200 years ago until it joined the single currency. If a euro exit beckoned, and the legal tender was re-embraced, the printing works in the iron-clad building would start to roll.
Related: Greece crisis: Tsipras under pressure to submit reform blueprint to creditorsRelated: Greece crisis: Tsipras under pressure to submit reform blueprint to creditors
At this point in the Greek standoff with creditors at the EU and IMF, mere mention of a parallel currency is utterly taboo.At this point in the Greek standoff with creditors at the EU and IMF, mere mention of a parallel currency is utterly taboo.
On Wednesday the finance ministry vehemently rejected reports that the leftist-led government was even thinking of introducing Scrip – a substitute for legal tender – to keep up with state payments. Claims that officials had drawn up contingency plans – described in detail by the daily newspaper Kathimerini – were brushed off as being “totally baseless”.On Wednesday the finance ministry vehemently rejected reports that the leftist-led government was even thinking of introducing Scrip – a substitute for legal tender – to keep up with state payments. Claims that officials had drawn up contingency plans – described in detail by the daily newspaper Kathimerini – were brushed off as being “totally baseless”.
“Such reports,” it announced, “are directed against the country and considered dangerous at a time when negotiations with creditor partners are at a crucial point.”“Such reports,” it announced, “are directed against the country and considered dangerous at a time when negotiations with creditor partners are at a crucial point.”
Even at this very late stage – after five months of fruitless talks and with the EU president, Jean-Claude Juncker, openly admitting that a detailed “Grexit scenario” is in place, replete with humanitarian aid that the country would receive as it transitioned to the drachma – officials are insisting there is no plan B.Even at this very late stage – after five months of fruitless talks and with the EU president, Jean-Claude Juncker, openly admitting that a detailed “Grexit scenario” is in place, replete with humanitarian aid that the country would receive as it transitioned to the drachma – officials are insisting there is no plan B.
When the former finance minister Yanis Varoufakis let slip at the weekend that there might be one, he was without a job by Monday morning.When the former finance minister Yanis Varoufakis let slip at the weekend that there might be one, he was without a job by Monday morning.
“If necessary, we will issue parallel liquidity and California-style IOUs, in an electronic form,” the erstwhile economics tsar told the Daily Telegraph when asked about the need to pay public-sector employees and pensioners at the end of the month. “We should have done it a week ago.”“If necessary, we will issue parallel liquidity and California-style IOUs, in an electronic form,” the erstwhile economics tsar told the Daily Telegraph when asked about the need to pay public-sector employees and pensioners at the end of the month. “We should have done it a week ago.”
Sources close to the prime minister, Alexis Tsipras, were reported as saying that the statement was reckless when the debt-stricken country was still trying to reach an “honourable compromise” with the institutions keeping it afloat.Sources close to the prime minister, Alexis Tsipras, were reported as saying that the statement was reckless when the debt-stricken country was still trying to reach an “honourable compromise” with the institutions keeping it afloat.
But with state coffers empty, banks closed and capital controls enforced, public-sector payments would be nearly impossible if Athens is not thrown a financial lifeline imminently.But with state coffers empty, banks closed and capital controls enforced, public-sector payments would be nearly impossible if Athens is not thrown a financial lifeline imminently.
In quick succession, the government must find €3.5bn (£2.5bn) to pay the European Central Bank (ECB) by 20 July and another €2bn euros to cover salaries, pensions and social security payments come 31 July.In quick succession, the government must find €3.5bn (£2.5bn) to pay the European Central Bank (ECB) by 20 July and another €2bn euros to cover salaries, pensions and social security payments come 31 July.
While a deal with creditors would cover the first, Kathimerini said the general accounting office was preparing IOUs, commonly known as warrants, to honour the latter.While a deal with creditors would cover the first, Kathimerini said the general accounting office was preparing IOUs, commonly known as warrants, to honour the latter.
Introduction of the Scrip would, inevitably, pave the way to euro exit, according to experts familiar with the rationale of the ECB.Introduction of the Scrip would, inevitably, pave the way to euro exit, according to experts familiar with the rationale of the ECB.
But with the Greek economy in freefall following the closure of banks – a move triggered by Tsipras’s controversial decision to hold a referendum over lenders’ demands for further austerity – many say it would be derelict of the government if it did not have some sort of contingency plan. Without an emergency infusion of money, it is only a matter of days before cash reserves run dry.But with the Greek economy in freefall following the closure of banks – a move triggered by Tsipras’s controversial decision to hold a referendum over lenders’ demands for further austerity – many say it would be derelict of the government if it did not have some sort of contingency plan. Without an emergency infusion of money, it is only a matter of days before cash reserves run dry.
“You get the feeling that they are making it up as they go along,” Anna Asimakopoulou, shadow finance minister with the main opposition New Democracy party, told the Guardian. “They keep saying there is no necessity for a plan B but if we stay in the eurozone or leave we are going to need technical and humanitarian assistance,” she countered.“You get the feeling that they are making it up as they go along,” Anna Asimakopoulou, shadow finance minister with the main opposition New Democracy party, told the Guardian. “They keep saying there is no necessity for a plan B but if we stay in the eurozone or leave we are going to need technical and humanitarian assistance,” she countered.
“And if, God forbid, it is the latter we are going to need a lot of humanitarian aid because we won’t have supplies, we won’t have medicines and we probably won’t have fuel. All we’ll have is aid and IOUs until we transition to the drachma.”“And if, God forbid, it is the latter we are going to need a lot of humanitarian aid because we won’t have supplies, we won’t have medicines and we probably won’t have fuel. All we’ll have is aid and IOUs until we transition to the drachma.”
Fourteen years after it entered the eurozone it is far from certain if the country even has the right ink, paper or machinery to print its old currency.Fourteen years after it entered the eurozone it is far from certain if the country even has the right ink, paper or machinery to print its old currency.
Last week Varoufakis claimed the country no longer had the presses to make drachmas. He told the Australian radio network ABC: “We smashed the printing presses – we have no printing presses.” Last week Varoufakis claimed the nation no longer had the presses to make drachmas. He told the Australian radio network ABC: “We smashed the printing presses – we have no printing presses.”
In 2000, Varoufakis said, before Greece joined the eurozone, “one of the things we had to do was get rid of all our printing presses [to ensure] this monetary union is irreversible.”In 2000, Varoufakis said, before Greece joined the eurozone, “one of the things we had to do was get rid of all our printing presses [to ensure] this monetary union is irreversible.”
At the currency press on Mesogeion, a roaring avenue on the outskirts of Athens, the guard at the entrance was quick to fend off questions of any kind. “Please do not ask anything,” he said, a pistol bursting from a holster as he stands up to block the view. At the currency press on Mesogeion, a roaring avenue on the outskirts of Athens, the guard at the entrance was quick to fend off questions of any kind. “Please do not ask anything,” he said, a pistol bursting from a holster as he stood up to block the view.
“All inquiries should be directed to the finance ministry and the central bank. Only they can tell you what is happening here.”“All inquiries should be directed to the finance ministry and the central bank. Only they can tell you what is happening here.”