5 steps for Greece to return to the drachma - Jul. 7, 2015 5 steps for Greece to return to the drachma by Alanna Petroff @AlannaPetroff July 7, 2015: 12:08 PM ET Greece's pension problem The Greek economy has nearly run out of cash and experts say the country could soon be forced to print its own currency. Many predict the country will have to re-introduce drachmas, which would see it go back to the old currency it used before switching to the euro. Here's a step-by-step guide to how this might work: 1. Start printing IOUs If the government and banks run out of euros, it's possible the government may begin printing IOUs to pay state employees and pensioners. Wolfango Piccoli, managing director at Teneo Intelligence, predicts that Greece may have to issue around 500 million euros worth of IOUs next week to pay public sector salaries, if Greece is unable to secure more financing from European creditors. These IOUs could be used as an alternate form of cash, though they wouldn't be as easy to use. 2.

Introduce new digital drachmas The government and banks could work together to convert all bank deposits from euros into drachmas, either overnight or over a set period of time. Practically speaking, this would mean a person with 100 euros in their bank account on Tuesday could find that they instead have 100 drachmas in their account on Wednesday. There wouldn't be any physical drachmas available yet, but the money would exist digitally. The government would set an initial exchange rate, but then individuals and businesses would have to decide the value of the new currency. An immediate, sharp devaluation of the drachma would likely ensue. "The real value of the so-called new currency will be determined by whether people will be willing to accept it," said Ludek Niedermayer, who previously worked as the head of the risk management department at the Czech central bank when the country introduced its new currency in the early 1990s. "Definitely, people will prefer to use euros because the new currency, whatever it is, will not be credible," he said.

Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, told CNNMoney that there isn't any historical precedent for this hypothetical Greek currency switch because other countries dissolved their old currency in favor of a new one. But in this case, the euro will stay in circulation. Many experts worry that Greece may soon have to start printing new drachma coins and banknotes. 3. Make the drachma credible To give drachmas credibility and encourage people to use them, Kirkegaard said Greece could demand that all future taxes be paid in the currency. On top of that, the government could guarantee the safety of all drachma-denominated bank deposits, but not euro accounts. But the best way for the government to encourage drachma use would be to commit to responsible economic policies and balanced budgets. Kirkegaard maintains that Greece's government is not inspiring confidence. 4. Print drachma banknotes and coins If the Greek government resolves to push ahead with its drachma currency, it would eventually have to print banknotes and coins.

The process of designing and printing new banknotes would take at least a year, according to Bernd Kuemmerle, who is head of the banknote business division at German-based Giesecke & Devrient, a leading global banknote producer. Printing new banknotes requires months of work that involves analyzing how many new banknotes a country will need and designing the new currency. Anti-fraud elements will have to be incorporated into the notes and the physical printing requires many steps, said Kuemmerle. And it's not cheap. Kuemmerle said printing 1,000 banknotes costs between €25 to €100 ($27 to $110). So if Greece wants to print 50 new banknotes per person -- which is the average for a normal economy -- the new notes would cost between €13.8 million to €55 million ($15 million to $60 million). Coin production can become even more expensive that note printing. 5. Distribute drachmas Once the money has been minted, the Greek central bank would have to distribute the fresh banknotes and coins across the country.

Kuemmerle said this is a relatively quick process, but it would have to be done in conjunction with a nationwide educational campaign so the population is kept informed about the currency changes. Many countries that switched currencies often give a timeline for when they will phase out the old cash. But in this case, Greece will have trouble convincing the population to stop using euros. Euro vs. drachma: What would you prefer? CNNMoney (London) First published July 7, 2015: 10:33 AM ET Who, What, Why: How would Greece switch currencies? - BBC News BBC News Who, What, Why: How would Greece switch currencies? 12 June 2012 Read more about sharing. Close share panel Political change within days in Greece may mean the country has to ultimately leave the euro. If that was to happen, how would they go about introducing a new currency? On Sunday, Greek voters could hand power to anti-austerity parties who want to scrap the bailout, the deal that qualifies Greece for vital eurozone funds. This would bring the country a step closer to a possible exit from the euro. So how could a new currency like the drachma be (re)introduced?

A new government would have to produce enough new notes to replace those currently in use in Greece while also doing their best to prevent a run on the banks. It would have to be introduced over a public holiday and there would be an interim phase between currencies. The answer It's uncharted territory, but scenarios could include: Print new currency and prepare ATMs and vending machines for the new note Announce the change over a public holiday when markets and banks close Impose capital controls After interim period, allow new currency to devalue, while lifting capital controls The preparations would ideally occur in secret, says Jonathan Loynes, chief European economist of Capital Economics. "If Greece were to introduce a new currency, they would have to impose some capital controls once the change had been announced. This would mean that people would only be able to withdraw a certain amount of money from their accounts, which would be necessary to keep things orderly and avoid a run on the banks. "Then there would be some sort of public holiday during which banks and financial markets would be closed.

In an interim period before the new currency is introduced, people could pay for things electronically or with small denominations of euros until the new currency became available." The new currency would then be introduced on a one-to-one exchange with the old, he says, but at some point the capital controls would be lifted and the new currency would sharply devalue. This is what happened during Argentina's economic crisis at the turn of the century. When the banking system came close to collapse, withdrawals were banned. The peso dropped in value, leading to high inflation, after Argentina defaulted on its public debt in 2002. Image caption Coins can cost more to produce than notes Recent reports have pointed towards English currency printer De La Rue as a possible source of new drachma banknotes. Director of marketing for De La Rue, Rob Hutchison, will not comment on speculation that the company has drawn up a contingency plan for the production of new drachma, but he explains that the money-printing process itself can take several months.

You can't stop people using euros to buy things Michael Massourakis, Alpha Bank, Greece "You have to consider the preparation of special banknote paper incorporating security features; the design of the notes; the process of bringing these elements together and then printing. It simply couldn't be done overnight," explains Hutchison. Economist and author of Greece's Odious Debt, Jason Manoloupoulos, agrees. "I have heard that that the process could take anywhere between three to six months." So what is involved in the actual process of changing banknotes? There is a lot to do, says Julie Girard, currency spokesperson for the Bank of Canada, which has been involved in that country's recent transition from paper to polymer notes. The many considerations in currency production range from the selection of the best base material and security features to the design on the notes. "We have a team of chemists, physicists and engineers whose job it is to go out into the marketplace and see what types of security features are available, both in other currencies and through companies that produce security technology." These are assessed, as are different base materials to produce a cost-effective but secure note. Focus groups decide on designs and then notes are produced and distributed, says Girard.

With so many cash transactions and withdrawals now taking place at ATMs and vending machines, these must be adapted to fit a new type of note. "We spent about two years working with companies that produce machines which dispense, accept and sort paper currency, providing test notes and staff from the bank to help them. Some machines may have needed to be replaced, adapted or upgraded," says Girard. Who, what, why? A part of BBC News Magazine, Who, What, Why? aims to answer questions behind the headlines Greece wouldn't have the time that Canada did, but preparations may have been secretly going on for months. Greeks have already reportedly begun to stash euros in safety deposit boxes and under mattresses . These notes could be used to finance transactions even if another currency became the local tender, says Michael Massourakis, director of economic research for Alpha Bank, Greece. "You can't stop people using that money to buy things, even if you make it illegal to use foreign exchange in transactions. The euro could still be used afterwards on the black market, for example." But just how "new" would a new Greek currency be?

Reports on Greece's financial future concentrate on the idea of the drachma - the currency which was replaced by the euro in 2001. Could these old notes be re-used? Although old drachma were still accepted in exchange for the euro by the Bank of Greece as recently as February 2012, most will have been shredded and burned, says the British Museum's Thomas Hockenhull. "If the original drachma printing plates still existed, it could be a fairly straightforward process to change the dates and use the existing machinery," he says. And coins may be ditched entirely. "They may just do away with coins and have only paper currency," says Hockenhull. "The cost of producing a coin can be more than that of making a paper note, because of the metal content." Reporting by Susannah Stevens Printing the Drachma: The Messy Future of a Post-Euro Greece - Bloomberg Printing the Drachma: The Messy Future of a Post-Euro Greece Matthew Campbell and Alex Webb Did Tsipras Push Out Varoufakis Post Referendum? Introducing a new currency is no small feat.

Recent cases -- East Germany’s adoption of the deutsche mark, the Czech-Slovak divorce of 1993, and the creation of the euro itself -- benefited from years of careful planning and broad popular support. If Greece were to abandon the euro, it would have neither. “Historical precedent suggests this would be hugely challenging,” said Richard Portes, a professor of economics at London Business School. “The situation in Greece is perhaps even worse because it’s not clear that they have the administrative capacity to move quickly to a new currency.” Greece’s government says it intends to keep the euro even if voters reject the terms of a proposed international bailout in a referendum scheduled for Sunday. While a poll commissioned this week by Bloomberg found the vote too close to call, it showed that 81 percent of Greeks want their country to remain in the euro zone. Many economists, though, say that would be difficult after a “no” vote -- even if in the long run the country might benefit from such a shift. The Greek banking system is dependent on support from the European Central Bank, which might be withdrawn in that event. That could force Greece to create its own means of exchange -- a new drachma -- to keep its economy running.

Countries switching currencies must grapple with two major questions: how to introduce new notes and coins, and what to do with bank accounts, debts, and financial instruments denominated in the old currency. National Business Card The former is relatively straightforward. The Greek central bank owns a press in the Athens suburb of Holargos that prints euro notes. That plant printed Greece’s pre-euro drachma, and could make a new drachma, too. “A currency is a national business card, so you want to make it right,” said Ralf Wintergerst, head of banknote production at Giesecke & Devrient GmbH, a Munich company that has printed banknotes since the days of Germany’s Reichsmark in the 1920s. Wintergerst says introducing a new currency typically takes at least six months, and sometimes as long as two years. Artists must draw the notes, security experts then add anti-counterfeit measures such as watermarks and special inks, and bank officials need to plan how much of each denomination is needed and get the money to banks.

Difficult Distribution “The most challenging thing was to establish efficient distribution and make sure the new currency was available everywhere,” said Boris Raguz, head of the Treasury Directory at Croatia’s central bank , who in 1993 oversaw the introduction of the country’s currency, the kuna, after the breakup of Yugoslavia. Greater difficulties arise when banks start issuing that money. Because of the time required to distribute new notes and coins, the two currencies have to exist side by side for some time. While Greek banks might move card transactions to the new drachma immediately, shops could accept both -- or perhaps only euros if merchants doubted the value of the new drachma. “When will the conversion happen? At what rate?” said Antonio Fatas , a professor of economics at Insead business school near Paris. “That’s the big question.” The two currencies would likely start at a one-to-one exchange rate, which might be fixed for a period of time. The euro was created in 1999, but it existed only virtually for three years, used for electronic transactions at a rate fixed against the francs, marks, and other currencies it replaced. Then on Jan.

1, 2002, euro bills and coins were introduced, though the old currencies were also accepted for about two more months. Little Planning Greek Drachma Definition | Investopedia Greek Drachma DEFINITION of 'Greek Drachma ' The former basic unit of currency in Greece. The Greek Drachma was an ancient currency unit used in many Greek city states. The drachma was reintroduced in 1832 following the establishment of the modern state of Greece; it replaced the phoenix, the first currency of the modern Greek state that was introduced in 1828. BREAKING DOWN 'Greek Drachma ' After Greece was liberated from Germany in 1944, old drachmae were exchanged for new ones at a rate of 50 trillion to one, issued as one, five, 10 and 20 drachmae banknotes. In 1953, Greece joined the Bretton Woods system in an attempt to slow inflation. The following year, the drachma was revalued at a rate of 1000 to one, pegged at 30 drachmae to one U.S. dollar.

The three modern Greek drachmae were replaced by the euro in 2001 at the rate of 340.750 drachmae to one euro. This exchange rate was fixed on June 19, 2000, and the euro was introduced shortly thereafter in January of 2002. Following the Greek debt crisis that erupted in 2009, there have been arguments for and against Greece eliminating the euro and re-introducing the drachma as its national currency. Trading Center How do you change a currency – fast? - Telegraph Economics How do you change a currency – fast? With Grexit looming for Greece, how would the country bring a new currency into circulation as quickly as possible? Old Greek drachma - that could be coming back Follow The drachma was the world’s oldest existing currency before it was replaced by the euro on January 1, 2001. And it may be about to make a comeback. This Sunday’s referendum is described by European leaders as a vote for or against the euro. If Greece votes “oxi”, the country may soon be looking for a new currency.

Haris Theoharis, a politician in the centrist party To Potami, said: "There's already a team within the prime minister's office, with staff from the general accounting office, right now working on the drachma." But how? Has anything like this ever been done before? Not really. The last time a currency union broke up was the Austro-Hungarian empire in 1918. When it became apparent that a break-up was imminent, stacks of currency were transported across borders and into the countries in which people thought it would be worth more when converted. The currencies which were created after the break-up of the empire took years to stabilise. A protester holds a Greek flag with the word 'no' written on it (EPA) In an ideal world, any government would want to introduce a new currency with an element of surprise to money rushing out of the country as people seek to avoid a devaluation of their euros. However, a Grexit, would be no surprise - though there are now capital controls in place to prevent the flight of money out of banks, and out of Greece. Without the backing of the European Central Bank, a new currency would have to be introduced very quickly.

De La Rue, the world’s largest printer of banknotes, said: “Working out the details … is all very well when you have a year or two to think about it. Make that a month or two, and things start to get interesting.” First you need a design for a note De La Rue organised the complex operation to replace Iraq’s old currency in 2003-4, delivering the notes 10 weeks after the order was placed. The company said that this process typically takes a year and a half. In South Sudan , the company designed, produced and distributed a new currency in six months - an unusually quick process. The company declined to comment on any current plans to create a new drachma. In 2012, the company drew up contingency plans when it looked like there was a possibility Greece might exit the eurozone, and Greek banks have been preparing for an exit of the monetary union for years. According to the Bank of Greece, old drachma cannot be used anymore, so new ones must be printed if a new currency is adopted, though these would likely be based on the old notes. It is a complex procedure: central banks provide designs or guidance, or a competition is held to produce ideas.

De La Rue then works on the design. In April 2013, designer Pavlos Vatikiotis came up with designs for a "new drachma", featuring portraits of modern Greeks from the arts and sciences, his tongue partially in cheek. A design for a new 200 drachma note (Pavlos Vatikiotis) He said: "I think the currency should be beautiful because it's kind of a mirror of a country," he said, adding - fatefully - "I don't know if we will ever need to go back to the drachma, but if this happens I would love to have these beautiful notes in my purse." Steve Pond, a designer at De La Rue, said: "A banknote is a country’s national, or international, calling card. An aesthetically pleasing banknote, or one that really communicates the special features of a country, has a knock-on effect. It influences people’s perceptions of that country.” There is also the prospect of deciding on denominational structure and anti-counterfeit protection. De La Rue said that the largest coin should be worth 2pc of the average daily wage, and the smallest note 5pc.

Then you need to print it For Iraq's new currency, De La Rue printed the banknotes in different location around the world: in Malta, Sri Lanka, Kenya and the UK. Special paper needs to be ordered, as well as millions of metres of security thread, watermarks, ultra-violet features and any other anti-counterfeiting devices. Countries within the Austro-Hungarian empire did not print new notes, but stamped ink on top of old crowns to create a new currency. Czechoslovakia had its name stamped, and Romania had a cross. Austro-Hungarian banknote overprinted in red with the label "Deutschösterreich" Greece has its own facility in Holargos, northern Athens, which can print notes and mint coins. In theory, this can be used for a new drachma. The ECB said that it has been responsible for printing €10 notes for the whole eurozone. Faisal Islam, political editor of Sky News, notes that during the Greek crisis of 2010/11, boxes of euro notes were airlifted to Athens from Italy and Austria. my book revealed airlifts of euros to athens during phase 1 of Greek crisis.

confirmed by Bank of Greece in this box: pic.twitter.com/MvWS4DtPGT — Faisal Islam (@faisalislam) June 23, 2015 Then you need to distribute it In Iraq, the distribution process was complicated by the ongoing war - one of the officials working on the Iraqi Currency Exchange team was badly injured in a bomb attack. A Greek process would be rather less dangerous – with capital controls, large amounts of money cannot be moved around, and so new currency could be more easily distributed. New laws would have to be enacted, and businesses would potentially have to draw up new contracts. The Bank of Greece would fix an exchange rate, and Greece would lose access to the ECB. Dollar bills being printed (Bloomberg) But what happens to the money Greece owes? The country's debts are mostly denominated in euros, and would likely increase in size as the new money is likely to devalue against the old. Greece would also be unable to print new money to pay it, as its creditors would not accept payment in drachma. What are the other options?

A parallel currency This would be circulated alongside the euro inside Greece to pay for taxes, food and clothing, freeing up euros to pay for debt and create growth. The money would be an IOU issued by the Greek government that could be passed from one person to another. People would, in theory, be willing to accept the money because it could be used to pay taxes, and Greece would exist in a grey area between Grexit and eurozone. But this is all in theory - Greeks would naturally be suspicious of such money. IOUs At the height of the Greek crisis of 2010, the Greek government issued a form of domestic bonds to medical suppliers in the absence of cash. These “pharma-bonds” , as they were known, acted as IOUs from the government and resembled a form of “quasi-drachmas”, according to economists at UBS. These bonds behaved much like a traded currency and could be deposited at banks as collateral for cash. Digital currency Much easier to design and distribute – but difficult in practice. Many Greeks don’t have a bank account, let alone a bank card. The economy is very cash-based, which is part of the reason why so many were able to evade taxes.

But if Grexit were to come in a decade’s time – who knows? ExchangeRate.com - Currency Information Greek Drachma 100 drachmas = 1 mina (or mna) 60 minae = 1 Athenian Talent (Athenian standard) Minae and talents were never actually minted: they represented weight measures used for commodities (e.g. grain) as well as metals like silver or gold. Modern drachma First modern drachma The drachma was reintroduced in 1832, soon after the establishment of the modern state of Greece. It replaced the phoenix at par. The drachma was subdivided into 100 lepta (λεπτά, singular lepton, λεπτόν). Coins The first coinage consisted of copper denominations of 1, 2, 5 and 10 lepta, silver denominations of ¼, ½, 1 and 5 drachmae and a gold coin of 20 drachmae.

The drachma coin weighed 4.5 g and contained 90% silver, with the 20-drachma coin containing 5.8 g of gold. In 1868, Greece joined the Latin Monetary Union and the drachma became equal in weight and value to the French franc. The new coinage issued consisted of copper coins of 1, 2, 5 and 10 lepta, with the 5- and 10-lepta coins bearing the names obolos (οβολός) and diobolon (διώβολον), respectively; silver coins of 20 and 50 lepta, 1, 2 and 5 drachmae and gold coins of 5, 10 and 20 drachmae. (Very small numbers of 50- and 100-drachma coins in gold were also issued.) In 1894, cupro-nickel 5-, 10- and 20-lepta coins were introduced. No 1-lepton or 2-lepta coin had been issued since the late 1870s.

Silver coins of 1 and 2 drachmae were last issued in 1911, and no coins were issued between 1912 and 1922, during which time the Latin Monetary Union collapsed due to World War I. Between 1926 and 1930, a new coinage was introduced for the new Hellenic Republic, consisting of cupro-nickel coins in denominations of 20 lepta, 50 lepta, 1 drachma, and 2 drachmae; nickel coins of 5 drachmae; and silver coins of 10 and 20 drachmae. These were the last coins issued for the first modern drachma, and none were issued for the second. Notes Notes were issued by the National Bank of Greece from 1841 until 1928, when the Bank of Greece was created. Early denominations ranged from 10 to 500 drachmae.

Smaller denominations (1, 2, 3 and 5 drachmae) were issued from 1885, with the first 5-drachma notes being made by cutting 10-drachma notes in half. Between 1917 and 1920, the Greek government issued paper money in denominations of 10 lepta, 50 lepta, 1 drachma, 2 drachmae, and 5 drachmae. The National Bank of Greece introduced 1000-drachma notes in 1901, and the Bank of Greece introduced 5000-drachma notes in 1928. The Greek government again issued notes between 1940 and 1944, in denominations ranging from 50 lepta to 20 drachmae.

During the German-Italian occupation of Greece from 1941 to 1944, catastrophic hyperinflation and Nazi looting of the Greek treasury caused much higher denominations to be issued, culminating in 100,000,000,000-drachma notes in 1944. Second modern drachma In November 1944, after Greece was liberated from Germany, old drachmae were exchanged for new ones at the rate of 50,000,000,000 to 1. Only paper money was issued. The government issued notes of 1, 5, 10 and 20 drachmae, with the Bank of Greece issuing 50-, 100-, 500-, 1000-, 5000-, and 10,000-drachma notes. This drachma also suffered from high inflation.

The government later issued 100-, 500-, and 1000-drachma notes, and the Bank of Greece issued 20,000-and 50,000-drachma notes. Third modern drachma In 1953, in an effort to halt inflation, Greece joined the Bretton Woods system. In 1954 the drachma was revalued at a rate of 1000 to 1. The new currency was pegged at 30 drachmae = 1 United States dollar. In 1973, the Bretton Woods System was abolished; over the next 25 years the official exchange rate gradually declined, reaching 400 drachmae to 1 U. S. dollar. On January 1, 2002, the Greek drachma was officially replaced as the circulating currency by the euro, and it has not been legal tender since March 1, 2002.

Third modern drachma coins The first issue of coins minted in 1954 consisted of holed aluminium 5-, 10- and 20-lepta pieces, with 50-lepta, 1-, 2-, 5- and 10-drachma pieces in cupro-nickel. A silver 20-drachma piece was issued in 1960, replacing the 20-drachma banknote. Coins in denominations from 50 lepta to 20 drachmae carried a portrait of King Paul (reigned 1947-1964). New coins were introduced in 1966, ranging from 50 lepta to 10 drachmae, depicting King Constantine II (reigned 1964-1974). The reverse of all coins was altered in 1971 to reflect the military junta which was in power from 1967 to 1974. This design included a soldier standing in front of the flames of the rising phoenix.

A 20-drachma coin in cupro-nickel with an image of Europa on the obverse was issued in 1973. In the latter part of 1973, several new coin types were introduced: unholed aluminium (10 and 20 lepta), nickel-brass (50 lepta, 1 drachma, and 2 drachmae) and cupro-nickel (5, 10, and 20 drachmae). These provisional coins carried the design of the phoenix rising from the flame on the obverse, and used the country's new designation as the "Hellenic Republic", replacing the coins also issued in 1973 as the Kingdom of Greece with King Constantine II's portrait. A new series of all 8 denominations was introduced in 1976 carrying images of early national heroes on the smaller values. Cupro-nickel 50-drachma coins were introduced in 1980.

In 1982, the spelling of the plural of drachma was changed from drachmae (δραχμαί) to drachmas (δραχμές). In 1986, nickel-brass 50-drachma coins were introduced, followed by copper 1- and 2-drachma pieces in 1988 and nickel-brass coins of 20 and 100 drachmas in 1990. In 2000, a set of 6 themed 500-drachma coins was issued to commemorate the Olympic Games. Coins in circulation at the time of the adoption of the euro were * 1 drachma (€0.0029)1 * 100 drachmas (€0.293) * 500 drachmas (€1.47) 1 Minted but rarely used. Usually, prices were rounded up to the next multiple of 10 drachmas.

Banknotes The first issues of banknotes were in denominations of 10, 20 and 50 drachmae, soon followed by 100, 500 and 1000 drachmae by 1956. 5000-drachma notes were introduced in 1984, followed by 10,000-drachma notes in 1995 and 200-drachma notes in 1997.

Banknotes in circulation at the time of the adoption of the euro were * 100 drachmas, Athena, Adamantios Korais (€0.2935) * 200 drachmas, Rigas Feraios (€0.5869) * 500 drachmas, Ioannis Capodistrias (€1.47) * 1000 drachmas, Apollo (€2.93) * 5000 drachmas, Theodoros Kolokotronis (€14.67) * 10,000 drachmas, George Papanicolaou, Asclepius (€29.35) Encoding In Unicode, the currency symbol is U+20AF ₯​ drachma sign. Euro, drachma, bitcoin? Greece’s currency options Euro, drachma, bitcoin?

Greece’s currency options Wednesday, 8 Jul 2015 | 2:34 AM ET CNBC.com 07/08/15 7:19 AM ET › European leaders have given Greece until the weekend to reach an aid-for-reforms deal with its creditors or risk bankruptcy and banking collapse. Here, we outline the currency options available to Greece if it leaves the single currency. Keep the euro Greece could unilaterally "adopt" the euro , even if it left the euro zone. This option would see it join countries like Monaco, Andorra, San Marino and Vatican City which all use the euro as their national currency, despite not being euro zone member states. The European Commission, the European Union's executive arm, allows these countries to issue limited amounts of euro coins, but they're not allowed to print their own banknotes. Only the European Central Bank (ECB) can authorise the issuing of issue euro banknotes. Greece would likely be required to pay its debt to the ECB in order to qualify, and the central bank would need to be in a "mood" to carry on providing assistance to the country's banks, Jane Foley, a senior currency strategist at Rabobank, told CNBC.

Develop a parallel currency If the ECB stops providing Greek banks with emergency funding, the central bank could begin printing another currency without giving up the euro to meet its commitments, such as welfare payments. The value of the new currency could likely fall rapidly against the euro, which could seriously impact Greeks' spending power. This inflation would give Greeks an incentive to carry on using the euro, Foley explained, entrenching a dual currency. It could effectively create a two-speed economy, with the euro dominating in sectors like tourism. Read More Why the drachma can't save Greece: Goldman Roger Bootle, executive chairman of Capital Economics, told CNBC that a parallel currency—rather than replacing the euro altogether—would be a way for Greece to show Europe that it hadn't left the currency union. This could potentially make it easier to continue to receive financial aid. "It's a fudge," Bootle said. "It's an awkward half-way house." Return to the drachma Another option is for the country to revert to its pre-2001 currency, the drachma, leaving the euro behind altogether. "The key thing is that it has to redenominate deposits and debts into a new currency ... which is the easy thing to do," Bootle said.

"The trickier thing to do is in terms of supplying notes—initially there won't be any notes available." To deal with what's bound to be a "messy situation," the government might issue IOUs in the interim. Stamps, for example, could be quickly printed in large volumes and used in place of bills, Bootle explained. Yannis Behrakis | Reuters Pro-Euro protesters hold Greek flags during a rally in front of parliament in Athens, June 30, 2015. Adoption of any new currency—whether or not it's called the drachma—would result in further defaults, Foley said. Greece has already effectively defaulted on a 1.5-billion euro ($1.6 billion) payment to one of its biggest creditors, the International Monetary Fund. A new currency would inevitably be weaker than the euro, increasing the weight of the country's euro-denominated debt. "Greece needs to be able to issue their own currency and need[s] the devaluation that comes with running your own currency," Bootle said. It's unlikely to be an easy transition, but he insisted that this was the country's best option. Pegged currency Many countries regulate their currencies by linking them to the euro.

Adopting a pegged currency, however, requires either a stable economy able to ward off speculative attack, or significant currency reserves. Bulgaria had enough reserves to introduce what's known as a currency board. This means it is committed to converting its currency—the lev—for euros on demand. However, Greece is unlikely to drum up enough currency stockpiles to use this option. Denmark's currency, on the other hand, is pegged to the euro but its economy is considered strong enough to maintain the peg without needing to build up such currency stores. Digital currency Some have suggested that Greece could adopt a digital currency like bitcoin, avoiding the messy practicalities of a new currency or paper IOUs. Garrick Hileman, an economic historian at the London School of Economics, said that while it's "very unlikely" that the Greek government would formally adopt bitcoin as an official currency, its use may increase significantly in the event of a Grexit. "Greeks may understandably lack confidence in a new drachma and seek an alternative," he said. But both Bootle and Foley were skeptical that an economy that relies so heavily on cash could function without physical bills.

Greece crisis: This is what will happen if Greece runs out of money and has to reinstate the drachma | The Independent Greece crisis: This is what will happen if Greece runs out of money and has to reinstate the drachma First of all it has to build some printing presses Friday 3 July 2015 12:33 BST Click to follow The Independent Online Greek people queue in front of an ATM mache to withdraw cash from a National Bank of Greece in central Athens on June 28, 2015 ANGELOS TZORTZINIS/AFP/Getty Images The Greek finance minister Yanis Varoufakis said on Australian radio this week that Greece couldn’t reinstate the drachma – the currency it used before it adopted the euro in 2001 – even if it wanted to. Why? "We don't have the capacity," Varoufakis told Australian public radio network ABC. "In order to impress upon the world that [joining the euro] was not a temporary phenomenon we smashed the printing presses! So we have no printing presses." Nonetheless, Greece may run out of euro-backed money in just a few days. It only has enough Emergency Liquidity Allowance to last until Monday.

Once that runs out, it may have to find a way to reinstate the drachma. Read more Tsipras vows referendum 'will go ahead' on Sunday Alex Jurshevski, the founder of Recovery Partners Limited, worked to restructure New Zealand’s debt in the ninties and during the Iceland crisis more recently. He said that once the Greek central bank had obtained reserves of drachma, either by importing or printing, the process of switching back would be swift. Pensioner wait to get their pensions outside a National Bank of Greece branch in central Athens “They’d have all the bills printed up,” he said in an interview. “They’d be waiting in a bunch of dump trucks.” After a bank holiday for a few days to make the switch, the banks would open again for business. “It would happen, boom, like that,” Jurshevski said. Once the drachma had been instated, it would likely tumble against the euro, meaning the government would have to print even more to keep up. Capital controls, limiting the amount of money people can withdraw, would have to be put in place to stop a run on the banks.

The old 1,000 Greek drachma notes and current 20 euros This could result in social unrest. Experts at Barclays said that historically similar moves have caused between 45 and 85 per cent devaluation of the currency. Capital Economics suggests that the drop could be more mild, closer to 20 per cent, and Oxford Economics says 30 per cent, Business Insider reports. Inflation would likely spike, causing prices for everyday goods in Greece to rise dramatically, but this would stabilise once the new drachma found its value against the euro. Despite these immediate effects, some analysts think Greece might actually be better leaving the euro in the long term. According to Capital Economics, a managed exit “could even end up as a favourable economic development for both Greece and the rest of the euro-zone”.

Question: What country used the Drachma as its currency, before switching to the Euro in 2001?
Answer: Greece