Will Greek default really mean leaving the EU?

by Stefan Karlsson

Christian Science Monitor
May 21, 2012

Recent opinion polls suggests that many Greeks are listening to the warnings of German leaders that if Greece cancels its austerity measures, Germany and others will stop funding the Greek budget deficit, as the parties that want to keep Greece's commitments are gaining at the expense of the far left wing parties that wants to increase government spending.

But what if the far left end up winning after all and Greece defaults? Would that necessarily mean that Greece would be forced to re-introduce the drachma? Actually, contrary what is commonly assumed that is not necessarily the case. After all, households default around the world all the time yet except in cases of death or emigration they continue to use the same currency as before, so there is no necessay connection between default and exiting a currency. And as polls show that nearly 80% of Greeks want to keep the euro and so does the leading far left party, Syriza, even a far left governments that defaults will try to avoid exiting the euro.

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