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Although Migeru pointed out that the current treaties do not prevent a country from having another currency as well.

Greece could state that they accept Drachmas, which they would use to pay salaries, and not contravene to the obligation of using the euro.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Jan 6th, 2015 at 08:48:48 AM EST
[ Parent ]
Actually, according to this, that's not the case:

http://ec.europa.eu/economy_finance/euro/cash/legal_tender/index_en.htm

Within the euro area, only the euro has the status of legal tender. This results from the fact that the money used in a monetary system does only have the status of legal tender if it is provided for under the respective monetary law.

Theoretically, I suppose, Greece could issue some kind of scrip à la Wöhrl:

Yet, contractual parties are free to agree to use in transactions other official foreign currencies with legal tender status in the state of issuance, e.g. the Pound Sterling or the US Dollar. The same applies to privately issued money like local exchange trading systems (e.g. voucher-based payment systems in certain communities) or virtual currency schemes (e.g. Bitcoin). Although these are not official currencies and have no legal tender status, parties can agree to use them as private money and without prejudice to the official currency (euro or national currency) being the sole legal tender.

However, it would seem to me that it would be difficult to decouple the value of the scrip from the euro.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt št gmail dotcom) on Tue Jan 6th, 2015 at 09:18:09 AM EST
[ Parent ]
it would seem to me that it would be difficult to decouple the value of the scrip from the euro.

It seems to me that, what governments cannot/willnot do by fiat 'the market', (esp. blackmarket), can do routinely and with ease.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jan 6th, 2015 at 09:58:12 AM EST
[ Parent ]
Probably. But in this case I would assume that the government would actually want its scrip to devalue against the euro.

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Tue Jan 6th, 2015 at 10:11:25 AM EST
[ Parent ]
And it would likely get it, absent some extraordinary intervention by the ECB.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jan 7th, 2015 at 12:43:32 AM EST
[ Parent ]
Within the euro area, only the euro has the status of legal tender. This results from the fact that the money used in a monetary system does only have the status of legal tender if it is provided for under the respective monetary law.

"Legal tender," however, can mean at least three different things:

  1. Legal tender for the settlement of all debts. In the minimalist reading this means that a debtor can void his debts by presenting the coin of the realm, in preference to whatever other currency or payment in kind is specified in the contract. In the maximalist reading, the debtor can do this with prejudice to all other obligations to settle in particular currencies, and the creditor can demand the coin of the realm in settlement in preference to other currencies. (Which would actually make for an interesting ECJ challenge to the requirements in various "trade" treaties that expropriations must be compensated in the currency of the former owner's choice, on the basis that this prejudices the status of the Euro as sole legal tender of the Eurozone.)

  2. Legal tender for the settlement of taxes. In the minimalist reading this means that you can always settle your debts to the tax man with the coin of the realm: The tax man cannot demand payment in kind if you are able to pay in the coin of the realm. In the maximalist reading, the coin of the realm is the only valid means by which to settle taxes.

  3. Legal tender for the settlement of purchases. In the minimalist reading this means that merchants must offer their wares at prices denominated in the coin of the realm, and must transact if those prices are met by a customer solvent in the coin of the realm. In the maximalist reading merchants may only transact in the coin of the realm.

Greece could argue for an interpretation of legal tender as the minimalist reading of all three prongs, which would enable it to operate a dual currency system. This reading would actually seem to be supported by the EC document you link to.

In principle, maintaining a dual currency system is a major inconvenience. In practice, Gresham's Postulate will usually suffice to keep the hard currency out of general circulation. And even if it does not, operating a dual currency system is a considerably smaller inconvenience than regular major industrial depressions, which is the result of the current mismanagement of the eurosystem.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Jan 6th, 2015 at 12:19:10 PM EST
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