Reply #2: It's very difficult to do [View All]

[muriel_volestrangler]

There would be a run on all Greek banks, as depositors rush to get their euros out before they become new drachmas worth a lot less. It's the 'get the pain over at the start' solution - sudden inflation, putting up the cost of imports, but allowing businesses that can start again from scratch to develop in a manner in which they can export at a competitive level.

You'd have to work out what people's reaction would be to a massive increase in the price of imports, and what you'd do about Greeks hold euros in cash of banks outside Greece. Do you introduce currency controls so that the amount of currency they can bring in and out is heavily regulated? You don't want the rich (who will be able to do such transactions more easily) to benefit from the exit from the euro, but neither do you want them leaving their money outside Greece permanently.