Gov’t mulling euro alternatives

The government is prepared to introduce a parallel currency to the euro, if required. Sources say that the Finance Ministry has begun planning for its implementation, which will depend on the outcome of negotiations with the country’s creditors.

As things stand, it will be impossible for state coffers to cover the payment of salaries and pensions at the end of the month. Kathimerini understands that the first half of civil servants’ monthly salaries (around 300 million euros), due next week, can be covered in euros. Alternate Finance Minister Dimitris Mardas also confirmed that the payment for the first half of the month is secured.

However, no one can say with any certainty that the state will be able to find the funds for the 2 billion euros in salaries, pensions and social security payments due at the end of July. For the 4.55 million pensions due every month, funds have to pay a total of 2.3 billion euros, including 850 million euros in direct state financing.

In this context, a number of people have recommended the introduction of a parallel currency in the last few months. An example of this was California’s decision to issue IOUs to cover tax rebates and other expenditure during the US state’s budget crisis a few years ago. One of Yanis Varoufakis’s last statements as finance minister was that Greece could also use IOUs.

In any case, the government wants to be prepared for any negative outcome in its talks with creditors, but even if a parallel currency does not in itself take Greece out of the eurozone, it certainly paves the way for such an eventuality. Sources say that the use of two currencies would be “risky” as it would constitute a clear violation of the treaty of the European Union and offer a legal pretext to start the process for Greece’s exit from the eurozone and the EU.

Furthermore, as the guardian of the euro for all the countries using it, the European Central Bank would not approve the use of two currencies.