The Greek government should create a second currency

Real-World Economics Review Blog

from Issue no. 70 of the real-world economics review 

The Greek government should create a second currency to be named the Drachma. The Drachma would be legal tender with the same value as the Euro, but for domestic payments only. Any payment, in the private sector, or to the government, for example for taxes or fees, could be made equally in Euros, Drachmas, or any combination of the two.

The government would start to make all payments, for wages, transfers, etc. with a combination of the two currencies. For example, they could set a ratio of 80% Euro, 20% Drachma. Without any further aid from the EU, the Greek government could increase its spending in this example by 20%.

The government should mandate banks to open a Drachma account parallel to every Euro account so that the Drachma could be freely used in payments through the banking system…

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