What can greece central bank do?

[johnyj]

I don't really understand the organization structure of EMU. Does Greece central bank have the right to create euro? Who controls greece central bank? Why couldn't Greece central bank print some Euro to repay their IMF and ECB loan???

[qiwoman2]

I don't really understand the organization structure of EMU. Does Greece central bank have the right to create euro? Who controls greece central bank? Why couldn't Greece central bank print some Euro to repay their IMF and ECB loan???

I don't think so I believe it is the ECB..The EUROPEAN CENTRAL BANK that prints the Euro as it is a centralized currency of the Euro Union. If it could print euros there would not be this liquidity problem. Greece though must become independent though because it's like one man controls the whole of the Greek Economic System, Mario Draghi so it doesn't make sense to me..

[HarHarHar9965]

The Bank of Greece, a member of the European System of Central Banks is the national central bank of Greece. It is a partially state owned S.A. share company with special privileges, with special restrictions and duties It cannot operate as a commercial bank and the percentage of shares that can be under Greek state ownership cannot exceed 35% In short, Greece central bank can't do shit as European System of Central Banks operate it 

[Amph]

they can only print dracma, which at this point, they are really equal to toilet paper, and one of the reason why they can't leave euro so easily

greece central bank as it is right now, it's kind useless

[BillyBones]

I don't really understand the organization structure of EMU. Does Greece central bank have the right to create euro? Who controls greece central bank? Why couldn't Greece central bank print some Euro to repay their IMF and ECB loan???

Good Question, However an other alternative would be that it's time for Greece to print their own currency, forget about Euro and let them have their own. It will have bad impact on their economy but it will recover once they started to act upon it, they must adopt their current situation and keep going on until it become stable.

[bryant.coleman]

they can only print dracma, which at this point, they are really equal to toilet paper, and one of the reason why they can't leave euro so easily

Wrong assumption. If they start printing Drachma banknotes in the near future, its value and the exchange rate can't be predicted right now. It will depend upon the economic conditions and the trade balance. At least in the initial few months, I believe that the Drachma will be stable. Then depending upon the economy, it will either move up, or move down.

[Amph]

they can only print dracma, which at this point, they are really equal to toilet paper, and one of the reason why they can't leave euro so easily

Wrong assumption. If they start printing Drachma banknotes in the near future, its value and the exchange rate can't be predicted right now. It will depend upon the economic conditions and the trade balance. At least in the initial few months, I believe that the Drachma will be stable. Then depending upon the economy, it will either move up, or move down.

well you are guessing as well, i believe that it will be worthless at first, it can gain some traction, if euro will be seen as a bad thing or if they can restart from zero and be good at restarting, not a given for sure

if their move will be inconclusive, their currency will be shit too

[coolcoinz]

You can't make something out of nothing. Banks are storing money and if there's no money there's not much they can do besides lying they still have it

[spazzdla]

You can't make something out of nothing. Banks are storing money and if there's no money there's not much they can do besides lying they still have it

The FED and every other central bank would disagree.  You can make a lots of shit from nothing and sell it to people for something.

[IIOII]

All national central banks in the Eurozone are members of the ECB and can vote as such. The ECB is the only entity that can emit Euros. This means that a single country's central bank is effectively powerless in regard to monetary policy if it has no support from other ECB members.

So the Greek National Bank could introduce a parallel currency (and devalue it as they see fit), but that wouldn't help the country's debt problem, because the debts are denominated in Euro.

they can only print dracma, which at this point, they are really equal to toilet paper, and one of the reason why they can't leave euro so easily

Wrong assumption. If they start printing Drachma banknotes in the near future, its value and the exchange rate can't be predicted right now. It will depend upon the economic conditions and the trade balance. At least in the initial few months, I believe that the Drachma will be stable. Then depending upon the economy, it will either move up, or move down.

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

[Slark]

Drachma won't be stable, how can it be? Introducing a new currency is no small feat. Recent cases - East Germany's adoption of the deutsche mark, the Czech-Slovak divorce of 1993,
and the creation of the euro itself - benefited from years of careful planning and broad popular support. If Greece were to abandon the euro, it would have neither.
While a poll commissioned this week by Bloomberg found the vote too close to call, it showed that 81 percent of Greeks want their country to remain in the euro zone.
Many economists, though, say that would be difficult after a 'no' vote - even if in the long run the country might benefit from such a shift.
The Greek banking system is dependent on support from the European Central Bank, which might be withdrawn in that event.
That could force Greece to create its own means of exchange - a new drachma - to keep its economy running. And that will be a mistake.

http://www.bloomberg.com/news/articles/2015-07-04/printing-the-drachma-the-messy-future-of-a-post-euro-greece

[johnyj]

I think Greece central bank indeed create euro, but not notes (I have noticed that each European country mint their own version of 1 euro and 2 euro coins, they are not the same look at different country. And they are inter-exchangeable: you can spend Spanish euro in France, etc...

But the question is still organizational: What makes Greece central bank listen to ECB's directive? Maybe they are from the same banking family? Or they have some kind of contract that Greece central bank must follow if they want to join EMU?

And to make a new currency value stable is very easy, just back it use gold and assets, and it usually works very well: People don't exchange gold with the new currency, they feel confident about the new currency when they CAN exchange gold with it

[bryant.coleman]

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

I don't think so. The Greek central bank will try hard (at least in the initial few weeks) to limit the devaluation of the Drachma (by buying Drachma from the Forex market). But everything will depend upon the volume of Drachma banknotes which they print. I hope that, at least in the beginning, it will be in small volumes. So it won't be that hard for the central bank, to control the exchange rates.

[scarsbergholden]

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

I don't think so. The Greek central bank will try hard (at least in the initial few weeks) to limit the devaluation of the Drachma (by buying Drachma from the Forex market). But everything will depend upon the volume of Drachma banknotes which they print. I hope that, at least in the beginning, it will be in small volumes. So it won't be that hard for the central bank, to control the exchange rates.

I dont even think they could print drachma because one the rules to join the Eurozone is for the countries to stop printing local notes and destroy their printing presses.

[lihuajkl]

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

I don't think so. The Greek central bank will try hard (at least in the initial few weeks) to limit the devaluation of the Drachma (by buying Drachma from the Forex market). But everything will depend upon the volume of Drachma banknotes which they print. I hope that, at least in the beginning, it will be in small volumes. So it won't be that hard for the central bank, to control the exchange rates.

Greek economy is in chaos and cant even sustain itself between its spending and incomes. It has no real assets, gold, foreign reserve to backup Drachma's value! How is it possible for them to control the  exchange rates?

[Gronthaing]

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

I don't think so. The Greek central bank will try hard (at least in the initial few weeks) to limit the devaluation of the Drachma (by buying Drachma from the Forex market). But everything will depend upon the volume of Drachma banknotes which they print. I hope that, at least in the beginning, it will be in small volumes. So it won't be that hard for the central bank, to control the exchange rates.

I dont even think they could print drachma because one the rules to join the Eurozone is for the countries to stop printing local notes and destroy their printing presses.

Doubt that alone could stop it. But it will take time for them to return to the drachma anyway. Initially they will probably try to negotiate and stay in the euro. They have a stronger hand now after the referendum. In the meantime maybe they will print IOU to keep the economy and the banks going.

[bryant.coleman]

Greek economy is in chaos and cant even sustain itself between its spending and incomes. It has no real assets, gold, foreign reserve to backup Drachma's value! How is it possible for them to control the  exchange rates?

Greece is still having sizable forex reserves. Their gold reserves are estimated at around 112.5 tonnes, which is worth some €3.88 billion at current bullion prices. Also, they have billions of USD worth of foreign treasury bonds in their reserves. That said, their forex reserves have declined considerably over the years.

They can control the exchange rate by buying/selling Drachma in the forex market.

I dont even think they could print drachma because one the rules to join the Eurozone is for the countries to stop printing local notes and destroy their printing presses.

We are talking about the possibility of Greece getting kicked out of the Eurozone.

[Amph]

The Drachma will devalue sharply from day one and adjust downward to the real economic ability of Greece. Assuming a different outcome is delusional.

I don't think so. The Greek central bank will try hard (at least in the initial few weeks) to limit the devaluation of the Drachma (by buying Drachma from the Forex market). But everything will depend upon the volume of Drachma banknotes which they print. I hope that, at least in the beginning, it will be in small volumes. So it won't be that hard for the central bank, to control the exchange rates.

I dont even think they could print drachma because one the rules to join the Eurozone is for the countries to stop printing local notes and destroy their printing presses.

also in the event of a kick from the eurozone, i doubt they will have enough time to re-print all their useless dracma, it isn't a thing that can be done overnight

[Kprawn]

From the banks point of view, it's not to create more fiat money. {Euro or Drachma}

They instituted these withdrawal limits to protect their own liquidity and the interest of the investors. If everyone suddenly withdraw all their money, a bank will go bankrupt.

They are just stalling the inevitable outcome. People lost trust in the banking system and they will withdraw their savings, if they are granted the opportunity to do it. Time will tell, what financial institution they will trust as a alternative. 

Bitcoin will act as a temporary alternative, but it might be a bit risky for the average person, with very little knowledge. {This is where trusted and regulated exchanges can make a difference} Did I say that? 

[GreenStox]

The GCB all they can do is to stall the collapse.

But mostly i think banks need to increase reserve rates, the bank insureres need to increase their fees, the investment insurance also need to increase its fee.

I think the banking system as we know it is done for. Good, i wont miss it, time to decentralize finance.

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