Drachma the future
Greece votes no to further austerity, plunging the EU into greater uncertainty
(Image via Ibtimes)
The end of the beginning or the beginning of the end? That is the question being asked today in the wake of Greece’s overwhelming no vote in a referendum yesterday on further EU austerity measures. With 61.31% of Greek voters rejecting further proposals from creditors, the result marks a severe set-back for the EU and increases the odds that Greece will leave the Eurozone.
Officials from the 19 EU member states will hold an emergency summit in Brussels tomorrow to discuss their response to the vote, but with the possible knock-on effects of the referendum almost impossible to predict in entirety, it is difficult to see what effective response EU leaders can make. This is especially so as divisions between member states, most notable France and Germany, on how to coordinate a response, continue to deepen.
While the majority of Greeks still support remaining part of the single currency, it is not clear whether this will be possible. If not, options include returning to the Drachma, issuing a parallel currency, or perhaps even using a digital currency. All options are not without serious risks and would entail further pain for the Greek people.
Despite hailing the referendum result as a ‘holy moment’, the Greek government signalled its intention to continue negotiations with its EU partners by announcing the resignation of Finance Minister Yanis Varoufakis this morning. Varoufakis was seen by many as a barrier to successful negotiations. Whether that proves too little too late will soon become clear.