Greece isn’t likely to leave the euro as the government wouldn’t have the capacity to issue a replacement currency, UniCredit SpA Chief Global Economist Erik Nielsen said.
Arranging the production of new banknotes wouldn’t be an “easy task for a government that cannot organize a barbecue, frankly speaking,” Nielsen said in an interview on Bloomberg television on Friday. “I really don’t believe they have either the political or technical capability of starting their own currency. Money needs to be a commodity of trust, and I don’t think they have the trust in the population.”
The International Monetary Fund said its team negotiating with Greece left Brussels on Thursday after failing to make progress on a debt deal that would help the country to avoid default. Since a program has to be in place by the end of the month the deal has to be agreed by the end of next week to allow time for parliamentary approvals, Nielsen said.
If talks fail and Greece tries to create a parallel currency to the euro, issuing new physical banknotes would still be difficult because the country does not have its own printing press. Notes ordered abroad would have to be distributed to banks, in secret, which are “halfway closed, nationalized, or under capital controls,” Nielsen said.
Greece’s creditors have “never seen anything so completely ridiculous, frankly speaking, from a debtor country in the way they approach it,” he said. “People are just simply fed up with this.”