A better way for Greece to exit the Euro?

[tpfkaw]

Now, the main concern with a return to the Drachma in Greece is that if a currency is instituted then it will be impossible to establish a stable valuation for a currency whose obvious raison d'etre is to be devalued, and there will simultaneously be a run on all Euro-denominated assets.

Perhaps a better way to do it would be for Greece to announce that they will be redenominating their bonds in some other country's currency declining in value relative to the Euro (the Turkish Lira, perhaps? ).  This way they would not have an immediately hyper-inflating currency or a wave of bank failures, and the markets would be given time to react to a less drastic move.  Then, they could move back to using the Drachma much more safely (although they could expect 20%+ bond yields for the forseeable future).

[True Federalist (진정한 연방 주의자)]

Besides the obvious political problem with Greece adopting the Turkish lira, the lira has been a fairly sturdy currency since they chopped six zeros off seven years ago.

The problem right now is that I'm not certain that Greece will be able to exit the Euro in time to avoid their fiscal crisis, no matter which currency they use when they exit.

[tpfkaw]

Besides the obvious political problem with Greece adopting the Turkish lira, the lira has been a fairly sturdy currency since they chopped six zeros off seven years ago.

I know, that part was a silly throw-away joke (hence the " ").

[LastVoter]

Wouldn't Greece adopting another currency immediately destabilize said currency(unless it's dollar, but that would be just retarded).

[tpfkaw]

Wouldn't Greece adopting another currency immediately destabilize said currency(unless it's dollar, but that would be just retarded).

No, because it's not controlled by the Greek central bank.

(And I'm also not suggesting they adopt the currency, just that they redenominate their bonds in it).

[LastVoter]

Wouldn't Greece adopting another currency immediately destabilize said currency(unless it's dollar, but that would be just retarded).

No, because it's not controlled by the Greek central bank.

(And I'm also not suggesting they adopt the currency, just that they redenominate their bonds in it).

Ok, that's different. I thought you were actually suggesting a transfer of currency from said country to Greece, which would most likely destroy the currency(or at least the living standard) of the residents of the country whose currency is "adopted" by the Greeks.

[True Federalist (진정한 연방 주의자)]

Wouldn't Greece adopting another currency immediately destabilize said currency(unless it's dollar, but that would be just retarded).

No, because it's not controlled by the Greek central bank.

(And I'm also not suggesting they adopt the currency, just that they redenominate their bonds in it).

Ok, that's different. I thought you were actually suggesting a transfer of currency from said country to Greece, which would most likely destroy the currency(or at least the living standard) of the residents of the country whose currency is "adopted" by the Greeks.

Not if they adopt the currency of a larger economy.  There are several countries that have done that.  But the point of adopting another country's currency is to stabilize the value of the currency when a government is unable to do so itself.  Greece needs to devalue, and once they unilaterally repeg their debt, there is no guarantee they won't do it again, so the only reason for doing so would be as a way to be able to quickly issue coin and currency by using that of another country.

[Beet]

Now, the main concern with a return to the Drachma in Greece is that if a currency is instituted then it will be impossible to establish a stable valuation for a currency

The main concern is contagion.