If Greece leaves the euro

What happens once a country leaves the euro?

New currency, which will appear in the financial markets first needs a new currency code, which can be identified by the computer trade and payments. This code is issued by the International Organization of Standards, which is based in Switzerland, a worldwide federation of national standards. It provides a three-character alpha code, with the first two letters representing the country and the third the name of the currency. In the event that Greece can not return to their old code drachmas, GRD, which is probably because there are still some remaining payments will have to be made. This will require new code probably GRN.

Then, the code must be entered in the software and payment systems so that computers can recognize it for the processing of payments and trade confirmations and other critical functions but invisible. Market infrastructure providers say it can be done in one day, if necessary.

Is this really all you need in the markets?

In fact, it requires a lot more. The transition to a new currency is more complicated when it comes to solving long-term forward financial contracts, such as swaps and options.

There are many legal issues that must be resolved, such as payments move from one currency to another. Some transactions may be modified or even rpredogovoreni. This is not an impossible job, but since it includes legislative changes, it is a slow and careful process.

Fortunately there is no wall against transactions with long-term Greek derivatives. The five-year saga made investors wary and few have adopted the Greek central bank, as the guarantor of their trade, even if the European Central Bank is allowed to be used as collateral in monetary policy operations of the Eurosystem. Some market participants suggest that it can be done in 30 days, but that could be too optimistic hoping for.

What must be done by the government to support the new currency?

Greek government could determine the ratio of the new Greek currency of half the value of the euro to gain some degree of competitiveness and the possibility of implementation and, through various means of capital controls and foreign exchange transactions and provide liquidity by issuing bonds.

But how to replace banknotes is the hardest part. Greece will suffer from interference in the banking system, bankruptcy, people will try to take their money out of the country illegally and uncertainties concerning commercial transactions.

What impact it will have on the markets of the Greek refusal euro?

Market turmoil after the announcement of capital controls or leaving the euro will be a concern of foreign exchange settlement service - CLS.

In addition, Greece will also have to develop a system for settling payments in central bank money, but it may take several years.

Can be a good result for Greece?

"The introduction of the new currency is complicated when carried out in a planned way. When you are ready and happen suddenly and coercion, the process will be disruptive to many unexpected consequences that can not be predicted."