Could we see Greeks purchasing their next coffee with USD?
As the Greek debt crisis resurfaces for a third time, Donald Trump’s reported pick as EU ambassador, Professor Ted Malloch, has revealed that senior Greek economists have enquired about the possibility of adopting USD’s if the country crashes out of the eurozone single currency.
Malloch said that Athens is so desperate to quite the eurozone, it is prepared to tie itself to the dollar, much like Puerto Rico.
Malloch said Angela Merkel is “freaked out” at the very possibility of such an occurrence, which after Brexit, could be a devastating blow to the European Union.
In an interview with Greek broadcaster Skai TV, Professor Malloch said…
“I know some Greek economists who have even gone to leading think tanks in the US to discuss this topic and the question of dollarization.”
“Such a topic of course freaks out the Germans because they really don’t want to hear such ideas.”
“Greece might have to sever ties and do Grexit and exit the euro. It needs debt restructuring, it really needs debt relief, and I know people in Europe don’t want to hear that.”
“They need to reduce the debt overhanging and that means frankly something that people in Germany and elsewhere have not been able to accept, it means a haircut to the lenders and to the banks in Germany and probably, at least in my perspective, a return to the drachma.”
“So the problem then is who will manage that transition, and how, to avoid all the chaos and all the instability.”
The Express UK adds…
Tying Greece temporarily to the US dollar would be one way for the authorities in Athens to ensure that its currency does not completely tank if it leaves the eurozone, as would likely occur with a reissued drachma.
However critics may argue the country would be jumping out of the frying pan and into the fire, as it would simply be trading one currency it has no control over for another.
World leaders are locked in frantic talks over Greece’s finances yet again this month, with the country about to run out of cash unless a fresh bailout package can be agreed.
Previous agreements have required Greece to sign up to devastating austerity measures which have gutted its economy, and have been heavily propped up with German cash.
But Greece’s debt has now got so huge, and the sense of weariness is so great on both sides of the talks, that there are now fears a deal will not be reached, causing the country to crash out of the euro.