FXStreet (Barcelona) – The BNP Paribas Research Team, expects Greece to introduce IOUs rather than paying invoices or salaries with euros, and a Grexit might happen eventually.
Key Quotes
“In case of no quick agreement with its creditors Greece it seems likely that Greece will have to introduce IOUs, which is a system of arrears. Rather than paying invoices or salaries with euros, there would be a promise that the money would follow later (although when would not be clear).”
“In a similar way the government would also need to support the banking system which would be facing a liquidity squeeze if the ECB would have tightened the conditions for its ELA. These IOUs could be used to pay taxes and for electronic transfers although companies and households will prefer payment in cash. These are however increasingly hard to make because of cash withdrawal limits.”
“One easily sees the complexity of the growing role of IOU’s and an increasing preference for cash. Eventually this could force the country to leave the Eurozone.”
If Greece were to leave the Eurozone, there would be a legal vacuum
“There are no clauses in the Treaty which underpins Economic and Monetary Union which would allow a country to leave the Eurozone and a country can’t be forced out either. In the European Union treaty, there is the possibility that a country would leave, but that would be on its own volition: it can’t be forced out. This implies that if Greece were de facto to leave the Eurozone, there would be a legal vacuum which would eventually require a treaty change.”
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