"If the Greek state were to become insolvent, it could pay its employees, pensioners and suppliers by means of promissory notes (IOUs) – as the US state of California did in 2009. Banks would credit the recipients of these promissory notes with the equivalent value on separate accounts."
"This parallel currency would allow the Greeks to pay their taxes. Moreover, the value of this parallel currency would depreciate significantly versus the euro, which would improve the price competiveness of goods produced in Greece."
"A parallel currency would be legally possible if the Greek state avoided giving it the status of legal tender, prohibited by Article 128 of the Treaty on the Functioning of the European Union. But even without this status, a parallel currency could circulate if the state offered the possibility of sing it to pay taxes."
"Irrespective of the legal assessment, we see the prospect of a parallel currency as doubtful. For one thing, on account of the very high risk of sovereign default, the Greeks are unlikely to trust it. Furthermore, after the wage cuts of recent years, Greece is no longer suffering from overly high unit labour costs but from a dysfunctional administration, where a parallel currency would not make any difference."
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