Greece’s new currency designs are ready. The green 50 drachma note features Cornelius Castoriadis, the Marxisant philosopher and sworn enemy of privatisation.
The Nobel poet Odysseus Elytis - voice of Eastward-looking Hellenism - honours the 200 note. The bills rise to 10,000 drachma, a wise precaution lest there is a hyperinflationary shock as Greece breaks out of its debt-deflation trap at high velocity. The amateur blueprints are a minor sensation in Greek artistic circles. They are only half in jest.
Greece’s Syriza radicals have signed a fragile ceasefire with the eurozone’s creditor powers. Few think this can last as escalating deadlines reach their kairotic moment in June. Each side has agreed to a deception with equal cynicism, knowing that the interim deal evades the true nature of Greece’s crisis and cannot bridge the immense political divide.
They have bought time, but not much. Nomura says Syriza could run out of money for basic government functions within ten days. “The risk of capital controls remains elevated,” it said. Greece must repay €1.6 bn to the International Monetary Fund in March.
Alekos Flambouraris, the government affairs minister, has already begun uttering the fatal word “delay”, as if it were possible to delay an IMF payment without triggering a total collapse of confidence. Syriza insiders warn privately that default is becoming an alarmingly real possibility. “It is so bad that anything could happen. I can’t talk any more, the phones are bugged,” said one official.
The outflows were brisk even before that. Deposit losses reached €12.8bn in January. This is showing up in the “Target2” payment data of the ECB system. The Greek central bank’s liabilities to the rest of the EMU network rocketed from €49bn in December to €76bn in January as capital flight accelerated. They may have hit €100bn by now.
This is double-edged. Creditors have even more to lose if Greece spins out of control. A full repudiation of debt to the EMU institutions and states would cost over €300bn. It would be the biggest default of all time, by an order of magnitude.