(ATHENS, Greece) — If Greece and its 11 million people left the European Union, it would be an unprecedented move within the monetary system that gave birth to the currency known as the euro.
A referendum, which has already been criticized as confusing and illegal, scheduled on Sunday will help determine whether a “Grexit” — Greek exit — from the 19-nation currency bloc could become a reality.
Here are some of the things that could happen if Greece ultimately leaves the European Union:
1. Nationalize Greece’s Banking System
One source with Greece’s ruling Syriza party said leaders have discussed the possibility of nationalizing the country’s banking system, according to The Telgraph.
“We will shut down the banks and nationalise them, and then issue IOUs if we have to, and we all know what this means. What we will not do is become a protectorate of the EU,” the source told The Telegraph.
2. Introduce a New Currency
A country has never left the EU, so it’s difficult to predict what Greece would do once the euro loses its legal tender status there, experts said.
A parallel currency could be used for a while, Hari Tsoukas, a professor of organization studies at Warwick Business School in the U.K., told ABC News.
Greece became a member of the EU in 2001 and adopted euro banknotes and coins in January 2002 after a transitional period. The dual circulation period, “when both the Greek drachma and the euro had legal tender status,” ended on Feb. 28, 2002, according to the EU’s website.
3. Return to the Drachma
Tsoukas said it’s likely that Greece would eventually revert to the drachma if the euro is no longer its main currency.
If the Greeks reverted to the drachma, the value of the Greek currency would drop considerably, with depreciation in the level of 40 percent against the dollar due to a large sell off of the currency, Valentin Marinov, head of Group-of-10 currency research at Credit Agricole SA in London, told Bloomberg.
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