Greek Drachma Comeback on Christmas

Fri, 11 Nov 2011 09:42:35 +0000

Giorgos Papakonstantinou made it quite clear that Greece will not withdraw from the euro zone. Such a decision, he claims, would have devastating consequences for the economy and the living standards in Greece. Papakonstantinou is not the Finance Minister of Greece but Minister for the Environment in Papandreou’s ex-government. He knows what the talks about. He was the predecessor of the current Finance Minister. He had to resign in June because of the cuts he pushed through.

Papakonstantinou predicts that real incomes would fall heavily for years to come if the Drachma was reintroduced. A decline of 50, 6O, even 80 per cent in paid wages would be the consequence, he estimates. Unemployment would rise to 30 to 40 per cent. The cost for the economy in an exit scenario would be simply enormous.

His estimates are the exact opposite of what the independent financial research institute ifo published recently. Munich based ifo is of the opinion that only the Drachma may save Greece’s economy. And they came up with the date of Christmas as the only viable solution for such a move. Over Christmas, banks are closed for three days and it would be possible to close the borders, the airports, and the railway links to prohibit Euro exports at the last minute. But Christmas is a long way off, and the government must be seen promoting the opposite scenario.

ifo is also of the opinion that it would take at least three days to print and distribute the new Drachma notes and coins. But there is another solution to this problem. Greece is in talks with Switzerland over a tax treaty similar to the ones concluded between Switzerland and the United Kingdom and Germany. This means that the right people to organise a few odds and end are already in Switzerland on legitimate business anyhow.

Orell Füssli in Zürich is one of the world leading companies for printing secure bank notes. With just a bit of encouragement from the Swiss government, they would be able and willing to provide Greece with a new currency, design and all included. It would be even easier to order the federal mint Swissmint to do the coins. This would save days and bring the problem down to distribution, but with no traffic in the air, everything could be flown in within hours of the announcement.

The tax treaty with Switzerland is a very big issue for the Greek government. Bankrupt Greece has a huge problem with tax evasion and always had. A large portion of the fugitive money is stashed Switzerland; estimates as to how much there might be are divergent. Swiss authorities published an estimate of 30 billion Euros; German MEP Martin Schulz (SPD) mentioned an amount of 200 billion Euros during an interview. The truth will be found somewhere in between.

Giorgos Papakonstantinou doesn’t know the amount; he just called it a lot of money. This is one reason why Greece is pressing for a conclusion of a treaty; tax income from that money will help to balance the budget in the future. Greece wants the treaty finalised before the end of the year, which is near enough to Christmas. A part of that treaty could see Greek Euro assets frozen in Switzerland on Christmas and re-emerging as Greek Drachma assets after that date. The Euros would help the state’s currency reserves greatly as the Drachma may be expected to plummet after its launch.

The former Finance Minister is of the opinion that many people in Europe have not realised the deprivations the Greek people are already suffering from the first cuts. Salary cuts for government employees see state personnel 40 per cent worse off than two years ago. Because of the higher taxes introduced at the same time, the available income has been halved. I dare say we really don’t see the deprivations. After Greece introduced the Euro, it went and augmented the salaries to German standards almost within months. This is called living above your means. To earn salaries as the Germans do, you have to work like a German. If you don’t, then you haven’t earned it. I can’t see much deprivation in that.

Sources and further reading:
Giorgos Papakonstantinou Interview on Swiss Television
ifo-Chef Sinn rät Griechenland: “Zurück zur Drachme”; in German
Orell Füssli – Homepage
Swissmint – Homepage
ifo – Homepage

System of Coinage

Thu, 21 Aug 2008 14:04:13 +0000

The invention of coinage is generally attributed to the Lydians during the early 7th century BC. They were wealthy and powerful people. Their coins were stamped and had a guaranteed weight. They were made from electrum, which was a mix of gold and silver. They were the size and shape of a bean and were known as “staters” or “standards”. The first to issue gold and silver coins was Croesus of Lydia in the 6th century.

The idea of using coins soon spread to the Greeks who began to use them from the 6th century B.C. the Bulgarians also began to use coins around the same time. By the 5th century, all the Mediterranean countries were making use of coins. Gold coins were the most valuable, followed by silver and finally copper.

Greek coinage lasted for about 500 years. The Romans picked up the idea of coinage from the. Slowly the system of coinage declined after 500 years. The coins slowly looked thin and unattractive. The Celtic and German tribes, who had close contact with the Greeks and Romans, also began the coinage system by the 2nd century BC. At first they copied the Greek coins but later changed them to abstract shapes from heads, horses and chariots.

The Chinese at first used cowrie shells as coins. Later they shaped bronze coins in the same of the cowrie shells, knives and hoes. The proper coins were issued in 212 BC by the first emperor of the Qin dynasty.

By the 15th century the art of coinage was revived as metal became more plentiful. Skilled artists engraved the coins. The first British coins were struck before the arrival of the Romans to Britain.

Coins are made by punching a piece of metal with the design of a coin on it. The Chinese cast their coins in moulds. The coins are made in a “mint”. Coins usually have pictures and some writing on them. They also have a milled edge. This was originally used on gold and silver coins to avoid fraudulent “clipping” of the edges of the precious-metal coins. The tradition is still continued to this day.

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