What would happen to the Greek economy if it chose to exit the euro area?

Unable to borrow from anyone (not even other European governments), the Greek government would simply run out of euros. Tax receipts would probably fall as the economy contracted, so the government might finance spending by printing money. The likely currency depreciation would also be inflationary.

Did the Euro help Greece?

Eurozone membership helped the Greek government to borrow cheaply and to finance its operations in the absence of sufficient tax revenues. Having given up independent monetary policy Greece could no longer devalue its currency relative to that of Germany.

Should Greece have been allowed in to the Eurozone?

Greece should never have been allowed in to the Eurozone. There economy is not harmonised with the core Eurozone economies. Debt, interest rates and unit labour costs are far too high. Iceland has shown stronger recovery from its financial crisis despite bank defaults and large depreciation.

Why is the EU so reluctant to help Greece?

There is a lack of political cohesion in bailing out Greece. The Eurozone members are reluctant to fully commit to dealing with the scale of Greek losses. There is a sense that EU leaders are only reluctantly agreeing to help Greece and that is after insisting on more strict austerity measures.

Should Greece return to the drachma?

A Greek departure from the eurozone would roil the global economy and cause chaos in Greece. However, some argue that a return to the drachma may allow Greece to become more competitive in the long run as it would allow Greece more control over its monetary and trade policy. Should Greece leave the eurozone? Here is the Debate Club’s take:

What happens if Greece runs out of money?

European officials, led by Germany, agreed to bail out Athens in return for budget-tightening and other austerity measures. If Greece reneges and international bailout funds are withdrawn, Greece will begin to run out of money as early as late June and may have to return to its old currency, the drachma, and exit the eurozone.