Wednesday, March 24, 2010

Will Greece turn from euros to gyros

The more time goes by, the more unlikely it seems that the European Union will bail out Greece. The options that Greece has to get out of this mess are limited. A default would not be politically viable, restructuring would not work, and devaluing its currency is an impossible solution. One of the options that remains is to leave the European Union to allow its currency to devalue, however, this option has been immediately ruled out by Greek prime minister George Papandreou. A possible solution would see Greece taking on a currency solely for domestic use while leaving the euro to be used for international transactions. Greece would print out scrips that act as currency inside the country. By doing this, Greece is able to devalue its currency without affecting the strength of the euro. Another method that is being contemplated is two-euro European Union where one euro will be used by Europe's weaker countries and the other by its most stable countries.

1 comment:

amanda said...

I think that it would probably be better for Greece and the Euro if Greece adopted their own currency. I dont really know about having two Euros or if that would work, but at least if they have their own currency they can have the option of using a monetary policy if they wanted to.