Revert to the Traditional Method of Issuing Currency

The most effective way to reintroduce the drachma would be for the government to revert to the traditional method of issuing currency, according to James Skinner in a letter to the Financial Times, 16th July

“Instead of creating the new money through issuing debt to the private banking sector, as is the general custom at present, the central bank would create newdrachmas in the government’s account to allow it to meet payments authorised under the national budget.

The new curren

cy would thus enter the economy as government expenditure payments, not as debt. This would mean the end of fractional reserve banking for drachma transactions. Banks would revert to their traditional role as money brokers rather than currency creators.

Bankers would naturally protest at losing the principal source of their excessive wealth, but there are plenty of examples of profitable banks that confine themselves to money broking activities.

The most important effect of the new currency would be to enable the national economy to thrive, with increasing employment. This would help build up the resources needed to enable Greece to pay its way in international transactions, which it is unable to do under present circumstances.

Mr Skinner in his letter proposes the introduction of new Drachma parallel to Euro, so that they could co-exist together. And he backs up his proposal with the example of a parallel currency that helps underpin the solid Swiss economy -WIR– which was founded after the 1929 crash and is still functioning successfully today.