Fears Greece may exit the euro and revive the drachma abound, but attempting a return to the currency Athens left behind would have tragic results, Goldman Sachs said.
“Transitioning from the euro to a new national currency is no straightforward task either for Greece or for Europe,” Goldman said in a note Monday. “Greece can’t just (re)introduce a national currency.”
Debating whether to rekindle the drachma, or drachmatization, isn’t just an academic question. With negotiations over Greece’s debt and finances proving touchy, the possibility the country may exit the euro zone, a scenario dubbed “Grexit,” has become more likely, analysts say, although they still assign a relatively low probability.
“The probability of an accident is still there,” Goldman said.
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