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The Pros And Cons Of Grexit

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On April 9, Greece repaid 495million euros loan instalment to the IMF (International Monetary Fund) as promised. The critical situation is over the hump, but the uncertainty of the coming debt repayment within a few months still remains. The way of financing from outer source to fill the exchequer is blocked. If Greece gets poor result from the negotiation with the creditors on the 24th this month, Greece might be in trouble with the default. Some experts are expecting that there is a large possibility that Grexit will happen in the near future. The word “Grexit” is combining the words “Greek” and “Exit”, the meaning is that Greek withdrawal from the Eurozone. The Eurozone is a monetary union of 19 European Union member states that using the …show more content…

When a country change their currency, they should print money as much as exchange rate, then a problem should not happen theoretically. If Greece sets the value of Drachma which corresponds to 1 euro and print money only that much, the problem will not happen. However, it would be hard to get out of temptation that printing more money than its value. In the bad situation that government run out of money, if the government print the lots of money with the lower value than it has, they could overcome a crisis temporarily. However, the economy is not that simple. If the government print money little by little more, the value of money keeps going down, and then a situation would come which is called "hyper inflation". Usually, hyper inflation occurs when the inflation rate rise by hundreds of percent. Hyper inflation occurs if they don't believe in the value of money. The reason why people use money in trading activities is they believe its monetary value that is not only a piece of paper. When the value of money is unstable, people try to seek to secure the others which could be worth instead of money. Therefore, the demands and the price of goods will be raised faster. When these processes go fast, hyper inflation would

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