Greek Drachma

What Is the Greek Drachma?

The Greek drachma was the fundamental unit of currency in Greece until 2001 when it was supplanted by the euro. The euro is presently the main official currency of the country.

Grasping the Greek Drachma

The drachma had been a currency unit utilized in numerous old Greek city-states. It was once again introduced in 1832, following the creation of the modern country of Greece, where it supplanted the phoenix, the principal currency of modern Greece presented in 1828. In 2002, the drachma was accordingly supplanted by the euro and stopped being legal tender.

One drachma is separated into 100 lepta. Somewhere in the range of 1917 and 1920, the Greek central bank printed paper drachma notes in denominations of 10 lepta, 50 lepta, 1 drachma, 2 drachmae, and 5 drachmae. Large denominations followed, with the 1000-drachma note showing up in 1901, and the 5000-drachma note in 1928. The Greek government issued more modest valued notes between the years 1940 and 1944, with denominations going from 50 lepta to 20 drachmae.

After Greece was liberated from Germany in 1944, old drachmae were exchanged for new ones at a rate of 50 trillion to one, issued as one, five, 10, and 20 drachmae banknotes. In 1953, Greece joined the Bretton Woods system trying to slow inflation. The next year, the drachma was revalued at a rate of 1000 to one, pegged at 30 drachmae to one U.S. dollar.

The three modern Greek drachmae were supplanted by the euro in 2001 at the rate of 340.750 drachmae to one euro. This exchange rate was fixed on June 19, 2000, and the euro was presented shortly from that point in January of 2002.

The Greek Drachma and Grexit

Following the Greek debt crisis that emitted in 2009, there have been contentions for and against Greece dispensing with the euro and once again introducing the drachma as its national currency by leaving the EU, in a cycle named "Grexit."

The primary impulse for Grexit was to bring Greece back from the edge of bankruptcy. The thought was that a devalued drachma would support overseas investment and increase European the travel industry at reduced rates by paying in euro, which is more costly. The euro's value would go further in Greece.

This would impact Greece negatively in the short term, yet the increased investment and the travel industry would assist it with recuperating from its debt crisis without the assistance of the eurozone and its rigid requirements.

Those against Grexit contended that the switch to the lower-valued drachma would reduce the expectations for everyday comforts of the Greek citizen and result in a troublesome economic change; all of which would bring about social distress all through the country.

On July 5, 2015, the Greek population casted a ballot in a mandate whether to acknowledge an agreement among Greece and its lenders — the European Commission, the European Central Bank, and the International Monetary Fund. The electors predominantly dismissed the proposal, which would have forced austerity measures — prompting speculation that Grexit, and a return to the drachma, was within reach.

On the 16th, notwithstanding, the Greek parliament casted a ballot to acknowledge a marginally modified agreement, deflecting Greece's department from the Eurozone.

History of the Greek Drachma

The National Bank of Greece issued drachma banknotes from 1841 to 2001, at which point Greece joined the European Union (EU) and adopted its common currency, the euro. Drachma note denominations went from 10 to 500 over quite a bit of its presence, while more modest denominations of 1 and 2 drachmae were issued before. Initially, 5 drachma notes were made basically by cutting a 10 drachma note in half.

In Ancient Greece, the most famous drachma coin, the tetradrachm, had the profile of the goddess Athena on one side and an owl on the other.

After Greece won its national independence from the Ottoman Empire in 1828, the new nation issued the phoenix as its currency; be that as it may, it was short-lived — just being used for four years. In 1832, the drachma was once again introduced, harkening back to its antiquated beginnings. The first drachmae notes were intrigued with the picture of King Otto, who ruled as modern Greece's most memorable king from 1832 to 1862.

Greek Drachma versus Euro

At the point when Greece switched to utilizing the euro, it benefited enormously. It switched from a low-value currency to a high-value currency. That being said, assuming Greece had its own currency, it could print however much it preferred until it stimulated economic growth. Likewise, having a more fragile currency would draw in investment, remembering an increase for exports and the travel industry. The downside is that printing too much money would cause inflation.

In spite of any benefits of having its own currency, Greece benefits from being part of the eurozone. It has a strong currency, it gets aid bundles, and utilizing a strong currency makes it more secure and more efficient for companies to carry on with work. Greece benefits from stable financial markets on account of utilizing the euro, which generates investments and trade.

Utilizing the euro accompanies inflexible rules that frequently don't benefit less rich countries, similar to Greece, while significantly benefiting more affluent ones, similar to Germany.

The Bottom Line

The Greek drachma was the official currency of Greece for the vast majority of its history; from days of yore to being once again introduced during the 1800s until it was supplanted by the euro in 2001. The switch to the euro has accompanied many benefits and detriments for Greece and the discussion of switching back to the drachma has been well known in the last couple of years. In spite of the benefits of a lower value currency, Greece benefits in numerous ways by utilizing the euro.

Amendment: Dec. 8, 2021. A previous form of this article erroneously stated that in 2015, Greece casted a ballot to either stay with the euro or to switch back to the drachma, with the votes to remain with the euro winning the majority.

Features

• Greece has experienced financially the mid-2000s, encountering a debt crisis, which called into question the benefits of utilizing the euro.
• The Greek drachma was the currency of Greece before it was supplanted by the euro in 2001. It was additionally the old money of the Greek empire and city-states.
• Drachma note denominations went from 10 to 500 over quite a bit of its presence, while more modest denominations of 1 and 2 drachmae were issued before.
• A movement known as Grexit, which proposes a return to the drachma, acquired notoriety during Greece's debt crisis.

FAQ

What Was the Drachma Made From?

The drachma was made with silver yet after some time it became spoiled as copper was brought into the silver.

What Was the Drachma Worth in Ancient Times?

Financial experts estimate that in the fifth century B.C., the drachma was worth roughly $54 in 2021 currency.

For what reason Did Greece Stop Using the Drachma?

Greece stopped involving the drachma as part of the European Union's switch to using one international unit of exchange. Greece had been part of the EU since the 1980s and as every one of the countries moved to take on one currency with the goal of benefiting from more efficient trade and financial markets, Greece moved with the interaction too.

Will Greece Switch Back to the Drachma?

At this point, regardless of the presence of "Grexit" allies, Greece won't switch back to the drachma.