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Should Greece default, a forced conversion from euros to drachmas will be a further catastrophe to Greek economy as the drachma will quickly collapse. However, if Greece leaves the Eurozone, but keeps the Euro as a national currency (at least for a year), its value will be kept stable because of the implicit trust in the euro.

There already are precedents of countries using the euro without being members of the Eurozone (Montenegro, Kosovo, Monaco, etc.). Is that possible for Greece?

Giskard
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    Why will the drachma quickly collapse? – Lumi Jun 16 '15 at 12:25
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    And who is forcing a conversion to drachma? – Giskard Jun 16 '15 at 13:42
  • @Lumi It would collapse just like any currency (from economically weaker countries) did that was bound to the US Dollar after the fixed exchange range was dropped. The question that I wonder is why that should be a bad thing. Naturally, devaluing the Greek currency would help Greek products to become competitive in the international market. – FooBar Jun 17 '15 at 21:44
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    I feel this question is slightly off topic here. Whether Greece is legally allowed to stay in the Euro zone after defaulting is a law question. – FooBar Jun 17 '15 at 21:49
  • @FooBar it's sloppy to assume that it would collapse automatically. Right now if they did a 1:1 conversion with the euro, it would probably rise, there's so little asset cash left in their banking system. The reason the US linked currencies collapse is that they over-expand their banking system relative to the dollar. That was what preceded the current crisis in Greece, but its' now what's happening now. – Lumi Jun 17 '15 at 23:28
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    Echoing @FooBar, is this a legal question on the relationship between credit default and EMU membership? If it isn't a law question what do you mean? – BKay Jul 22 '15 at 15:27

2 Answers2

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The Greek banks will not be able to get any Euro to give out, if the IMF and the EU cuts of all the loans to Greece. Therefore if Greeces remains in the Euro, there will be no banking system in Greece.

Ian Ringrose
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What is the point in staying Euro, if Greece defaults in its debt. If they default, they want to devalue the salary of the employees. If they still stay in Euro, they need to pay same salary in Euros to all their employees. Where will they get the Euros to pay those. The market to Greece will be closed more than now, there will be no emergency assistance from ECB.

adam
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  • This answers the question whether it should leave the Euro zone. OP asked the question whether it can. – FooBar Jun 17 '15 at 21:42