Yanis Varoufakis was kicked out for saying Greece should introduce a parallel currency
Yanis Varoufakis, who was Greece’s finance minister until Monday morning, was reportedly pushed from his job after he told a journalist that Greece could introduce a parallel currency in the weeks ahead.
Cash is flooding out of Greek banks at the moment, and the government desperately needs money to make payments due later this month.
It requires euros for some things (including debt repayments to the European Central Bank), but it could pay government workers and pensioners in some sort of scrip that retailers would be legally obliged to accept.
Varoufakis suggested the possibility to The Telegraph’s Ambrose Evans-Pritchard over the weekend:
“If necessary, we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago,” said Yanis Varoufakis, the finance minister.
California issued temporary coupons to pay bills to contractors when liquidity seized up after the Lehman crisis in 2008. Mr Varoufakis insists that this is not be a prelude to Grexit but a legal action within the inviolable sanctity of monetary union.
And according to The Wall Street Journal on Monday, Prime Minister Alexis Tsipras was looking to replace Varoufakis for some time, given his poor relationship with other European finance ministers.
Mr. Varoufakis’s popularity in Greece has deterred Mr. Tsipras from ousting him until now, these people say. But the premier reacted after Mr. Varoufakis told a U.K. newspaper late Sunday that Greece might introduce a parallel currency and electronic IOUs similar to those issued previously in California. Mr. Varoufakis quickly backtracked on his comments to The Daily Telegraph but his prime minister had had enough, say the people familiar with the matter.
It’s just a report for now, but there’s no doubt that Varoufakis did alienate other European leaders, and talk of a coupon currency wouldn’t have been what Tsipras wanted as the country got ready for Sunday’s crucial referendum.