Greece would suffer disastrous consequences if it ditched the euro for the drachma, the country’s central banker said in a newspaper interview, warning that such a move would result in a massive devaluation.
“A return to the drachma would mean real hell, at least in the first years,” George Provopoulos, governor of the Bank of Greece, said in an interview with Sunday’s Kathimerini newspaper. “Living standards would plunge. The new currency would be significantly devalued, possibly by up to 60-70 percent.”
Debt-saddled Greece, which joined the euro in 2001, is struggling to meet the bailout terms set by its international lenders and could default if there is no deal with private bondholders on a debt restructuring before March.
Greece is negotiating a bond swap scheme which is a pivotal part of a second, 130-billion-euro bailout package agreed by euro zone leaders in October. The restructuring aims to cut its debt by 100 billion euros and render it more manageable.
Athens faces bond redemptions of 14.5 billion euros ($188.23 billion)in March.
Provopoulos said proponents of a return to the drachma were wrong because it would bring the country back decades and undo significant progress.
“I don’t believe Greeks would want to experience such a nightmare scenario which would entail huge risks for the country’s security,” he was quoted as saying. “I am certain that Greeks would not allow a return to the distant past.”
A Kapa Research poll for Sunday’s To Vima newspaper showed more than 77 percent of Greeks want the coalition government to do all it takes to ensure the country stays in the euro zone, a bloc that now includes 17 countries.
(source: Kathimerini, To Vima, Reuters)
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