Euros without the Eurozone

Euros without the Eurozone
This 2 euro coin is issued by Monaco, which is not a member of the Eurozone

Grexit not what people who need it. The standard argument is that Greece is approaching, at a fork in the road. It must either stay in the euro, or adopt a new currency. I do not think this is the actual fork facing Greece entirely accurate description. Over the next few months, Greece will:
A) to maintain a good standing member of the organization called "the euro area", continued the legitimate use of the agency's currency, the euro, or
B) leave the euro zone, while continuing to use the euro 'illegal'. *
(Official) euroization or in fact any of the current situation (unofficial) euroization which means law. In both cases, the euro support.

The probability of a new drachma emerging is very low. A country sick to rapidly introduce new currency to popular belief, more importantly, there is a monetary unit of account is commonly used in magical thinking. Greece has been using the euro as a common "language exchange" fifteen years. Switch to a new unit is about is unlikely because the Greeks suddenly began to speak German, network effects and all. Considered the Greeks do not want the drachma, they have voted in favor of the euro facts. Syriza has no mandate to bring into existence a new unit. ***

Option B is not a surprise. Various "illegal" Other people piggyback off the national currency management. Zimbabwe, Ecuador and Panama using the dollar is not the Federal Reserve System, and Andorra, Kosovo, Montenegro, Monaco, San Marino, the Vatican use the euro will not be a part of the card carrying member of the euro area. Eurozone can not do anything to prevent Greece in fact adopt the euro. This is for Greece to make their own decisions.

If Greece out of the euro on the basis of law, while maintaining the user of the euro, it would be what to give up?

The Greeks do not lose eurozone membership has provided price stability and versatility. This is probably the cause of most Greeks, they want to stay in the euro vote to declare the function.

However, Greece will no longer get the lender of last resort convenient access to the euro zone. Some might say that this country will be better without these facilities, because this discipline, a true "no bailout" policy will be performed both on the banks and the government. Greece also lost direct access to the euro banknotes monopoly supplier. A Greek banks can now claim will be deducted from their accounts in the euro zone, a batch of freshly printed paper euro trucked to their coffers. Gone are functional. Panama survived and even prosper for decades did not get the Fed's discount window or the Fed's cash facilities. ***

Greece will also lose its seat on the ECB Governing Council, and therefore no say in determining monetary policy. Greece seats may never gave it too much influence anyway, especially with respect to the ECB's decision-making dominant influence in Germany. Greece's data will also be considered investment policy decisions in the euro area should Greece leave. However, because it clocks in only about 2% of the total size of the euro area, the Greek data has never been concerned about the ECB's policy-makers, starting with the aggregate large influence. Euro or unnoffical formal user, Greece would have been a lack of independent monetary policy.

Another concern is that Greece might not be allowed to use the ECB's TARGET2 the real-time settlement mechanism. However, Denmark, Bulgaria, Poland and Romania are connected to TARGET2, though not a member of the eurozone. Of course, Greece will be eligible. If not, it will not be too complicated, Greek banks set up their own payment system.

Finally, Greece will lose all of the seigniorage. Euro area Member States currently receive the ECB's income share in its currency monopoly profits. I do not see this loss as a big problem. Seigniorage is already overshadowed by a modern tax as a major source of government revenue.

As a result, Greece whether the user an unofficial member of the euro zone or legal eurozone's chief financial products to retain, its meaning is the same. No fork in the road, at least not from the perspective of monetary policy point of view, is a continuation of the same path as before the euro.

I have left two function. If Greece exits the euro zone debts must unravel and solve it. Has invested about 2 million euros during the establishment of the European Central Bank, Greece will have to buy out the rest of the euro area Member States at an affordable price. Balance, this will be the obligation of Greece to relax, it has accumulated a medium-term debt in the euro area. This debt, is known for its TARGET2 deficit, currently at about 100 clocks one billion euros, far more than the capital it owed. This will require an incredible expenditure of resources to pay the cost of. To stay in the euro advantage of the Greek population that their debt need never be solved. After all, TARGET2 liabilities essentially permanent. Only leave do they face the last day of reckoning.

However, if Greece made little to no debt costs squelch, they may as well just leave the euro zone, without paying back the 100 billion it owes. It got to continue to ride piggyback on top of the euro, enjoying (almost) all the same benefits as eurozone members, without anything on the hook. Why not always burn cigarettes, instead of paying for them?

This is why Greece has a certain degree of power in the rest of the euro area member states. If it's shrugged leave, the remaining members are unpaid hook tab. Once Greece goes down in fact euroization road, how long, the next largest debtor to the rest of the eurozone decided to shrug and leave? Nick Rowe said, the last one holding a common currency is the sucker, because they will leave everyone's bad. In order to keep the system sustainable, the architect of the euro project needs best efforts to ensure Greece does not incentives merely shrugged and flow wanderer free ride euros. I do not envy them their task, it was a tough year.

I've left the hand of the Greek banking system, which may be insolvent. Once something from print, the central bank cut Greek banks simply can not meet the rush to convert deposits into euro banknotes. The only way to restore the function of the banking system is to cut the number of Greek bank deposits fell to size, so that the basis of the bank's assets will be sufficient to absorb run into cash. We are talking about billions of euros depositors' bail-out. " Such a prospect is certainly tilted against A and B decided to move back between. **

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* Being from another ECB cut off loans, one might think that Greece has gone half toward the exit from the euro.
** Shall increase on July 2.
*** Increase cash facilities, July 2.
**** The last two sentences of this paragraph was added on July 3.
Note: The apology is increasing, but the topic is complex, the situation is more complicated day, so instead of writing twenty-three post I added bits to the original.

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