6/4/12

 In the latest sign that a Greek exit from the Eurozone is all but imminent, global bank HSBC ran extensive tests on their ATM machines in Athens and throughout Greece in preparation for a return to the drachma. The tests were rigorous and were done to ensure the machines could handle notes of different sizes and textures.

HSBC has done extensive testing across the board in Greece, but admits that it's difficult to predict what will actually happen if Greece leaves the Eurozone and returns to the drachma. Being too overt about the preparations could lead to the very bank runs HSBC is trying to avoid.

Mr Mackay said that the planning has been a challenge because it is impossible to do a "dry run" unless and until Greece leaves the single currency. "You can theorise and inform staff but you can't do more than that because it is A, inappropriate, and might lead to events you are trying to avoid and, B, there are legal, structural and regulatory issues," he said.

There's no question that the June 17 vote in Greece is going to be huge. Whichever way it goes it means pain for the Greek population, but those pushing for an exit from the Eurozone are trying to paint it as the lesser of two evils because at least then Greece will be back in the driver's seat currency-wise. I shudder to think about the resulting inflation and impact on the wider Eurozone.

In the meantime, the dollar is getting stronger against the Euro (natch), and the Euro is near the lowest level I've seen it since I moved here in 2008. If the Grexit actually happens (and I think it will), we might see the Euro at or below parity with the dollar, which could be a game changer.

All very interesting.

Comments (18)

6/4/12

So I'm going to start this with the caveat that I know next to nothing about currency trading but I've been told that there are some decent sized firms and individuals that are planning on buying physical Euros if and when Greece leaves the Euro. Is there any meaningful difference between holding the physical currency vs. just trading it through a broker?

If I had asked people what they wanted, they would have said faster horses - Henry Ford

6/4/12
happypantsmcgee:

So I'm going to start this with the caveat that I know next to nothing about currency trading but I've been told that there are some decent sized firms and individuals that are planning on buying physical Euros if and when Greece leaves the Euro. Is there any meaningful difference between holding the physical currency vs. just trading it through a broker?

I think that if you have "physical euros", they will always be euros. They can't be converted to drachmas.

If you have some bank account that is under greek juridiction, they can just tell you "hey mate, 1EU = 1drachma starting now". Then massive devaluation, then you are fucked.

6/4/12

any greek who doesn't cash out before the exit and revaluation is going to be fucked in the ass much worse than the argentines in their most recent devaluation. i'm ballparking this at 75-80%.

6/4/12

I am going to trademark the term "500 quadrillion", then file a lawsuit when they start printing drachma bills of that size.

6/4/12
IlliniProgrammer:

I am going to trademark the term "500 quadrillion", then file a lawsuit when they start printing drachma bills of that size.

HAHAHA! +1

6/4/12
Edmundo Braverman:
IlliniProgrammer:

I am going to trademark the term "500 quadrillion", then file a lawsuit when they start printing drachma bills of that size.

HAHAHA! +1

The only problem with that is they will probably settle the suit by paying it with Drachmas....

6/4/12

@HPM

If I'm going to make a currency play these days (and pretty much since I left currency trading in 1999), I buy the physical currency. Obviously I sacrifice the leverage of a futures contract, but I'm also no longer constrained by time.

The other way to make the play is through your PayPal account as I outlined a couple years ago here:
http://www.wallstreetoasis.com/blog/how-to-trade-c...

6/4/12

Makes sense. Thanks fellas.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

6/4/12

Ha! I just looked at that post again Happy and you were the first comment.

6/4/12

Does HSBC plan to raise ATM fees when they need to dispense 5 lbs of bills to get USD $500 out of the machine?

6/4/12

IlliniProgrammer:
Does HSBC plan to raise ATM fees when they need to dispense 5 lbs of bills to get USD $500 out of the machine?

LOL. Always makes me think of this:

6/4/12

Yes, but at least I'll get the first quintillion-drachma notes.

6/4/12
IlliniProgrammer:

Yes, but at least I'll get the first quintillion-drachma notes.

True.

I have a 100,000 Croatian Dinar note, and a 10,000 Reich Mark note. We can add it to the museum collection.

6/4/12
Gomez Addams:
IlliniProgrammer:

Yes, but at least I'll get the first quintillion-drachma notes.

True.

I have a 100,000 Croatian Dinar note, and a 10,000 Reich Mark note. We can add it to the museum collection.

I have a bag full of Zim dollars with more zeros than I can count... they even have expire dates!

6/4/12

more worried about my euros possibly being worth nothing for my trip home soon

I eat success for breakfast...with skim milk

6/4/12

This is it!! Here comes the exit!! I wonder if the 'powers that be' will be able to ringfence Italy and Spain or if they will follow Greece out of the EMU??? Will there be a 'Lehman Moment?' Hopefully not as banks and businesses have had two and a half years to prepare for this.

All in all, this is probably a good thing for the Greeks. Their will be some serious pain in the short term but in the end the Greeks can devalue and gain some sort of competitiveness back. Having a devalued 'New Drachma' has the potential to really help their tourism industry over the summer.

6/4/12
Edmundo Braverman:

Whichever way it goes it means pain for the Greek population, but those pushing for an exit from the Eurozone are trying to paint it as the lesser of two evils because at least then Greece will be back in the driver's seat currency-wise.

Did you guys see the Greek Drachma ticker test that bloomberg did today ? I smell poo poo...
http://rt.com/business/news/greek-drachma-bloomber...

6/4/12

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