YEREVAN, May 22, /ARKA/. If Greece’s next set of elections produces a government opposed to its bailout, this could lead to a parallel currency to the euro emerging in the country, rather than a formal exit of the euro zone and return to the drachma, German Die Reinische Post newspaper said quoting economists at Deutsche Bank.
In a note, Deutsche Bank said Greece was unlikely to leave the euro as this would result in “widespread default and a collapse of the banking sector, which could lead to economic, social and political catastrophes.”
Instead, the bank’s economist Thomas Mayer in Frankfurt thinks a more likely scenario would be a partial stop in financial assistance, with continuing support for debt-servicing needs and the Greek banking sector but no further support for the financing of the government’s primary expenses.
“In this case, (the) difficulties of the Greek government in paying its bills could induce it to issue IoUs that would form the nucleus of a national parallel currency,” the world’s biggest currencies-dealing bank said, dubbing this parallel currency the “Geuro”.
This would allow Greece to devalue its exchange rate without formally exiting the currency union. -0-
