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Political instability in Greece could elect an anti-austerity party in the coming weeks, looking for new financial solutions, perhaps Bitcoin. With a weakened economy and risk of exit from the euro-zone, the Greek party needs new economic policy to solve the country's deficit.
In the last 24 hours, Greek MPs have rejected the government's presidential nomination triggering a new round of parliamentary elections, likely to bring the left wing to power. The coalition of radical left wing parties called Syriza now hold a 5-point lead in the latest polls, ahead of the Prime Minister's Conservative party. With the snap election coming on the 25th of January, the “anti-austerity” party's promise of an alternative to the bailout conditions imposed by the EU could create an increased space and demand for digital currencies in the country.
By abandoning the restrictions and financial austerity policies required in terms linked to Greece's 2011 bailout, Greece will face further rejection from the international bond markets (the normal way of raising governmental capital), and risk a second banking default unless it achieves renegotiated finance terms from the EU. The prospect this raises for citizens in Greece, is that such a move could force Greece's exit from the Eurozone making their current cash and savings held in Greek issued Euros worthless. Back at the height of the 2010 credit crunch German and British political figures began encouraging their citizens to dump Greek issued Euros in favor of German ones for fear of exactly this issue.
To stem the flow of cash from the country in the case of this euro-exit event, it's likely that the state would impose foreign currency controls similar to those seen recently implemented in Belarus. Imposing such a 30% tax on all foreign currency purchases would force many Greek citizens to convert any Greek-Euro holdings in a neo-Drachma almost regardless of rate. This is where digital currencies could provide a solution, by allowing Greek citizens to begin exchanging their current financial holdings into a Bitcoin like vehicle in order to evade such monetary restrictions, money could be held and exchanged outside of a volatile post-euro environment. Given Greece's historic problems with tax-evasion, it seems likely that there would be a good number of citizens used to unusual financial arrangements, and perhaps more interested in investigating new forms of financial handling in order to make their work best for them.
The Syriza coalition has not yet made any comments in regard to cryptocurrencies, but if Greece were to see an increase in the number of employers issuing, citizens holding, and merchants accepting Bitcoin as a viable alternative currency, it seems unavoidable that such a political group seeking a radical alternative to German high-capitalism ignore it.
Greece has been in financial dire-straights since the late 2000's when a long period of high public spending, combined with reported mass tax evasion, left Greece requiring €240 billion in EU bailouts in order to keep the country financially liquid. The domestic economy nose-dived in the global financial crisis and has seen a 25% shrinkage in real terms. The burden of debt repayments alongside the mass unemployment and austerity measures necessary to service the debt has led to the Syriza coalition of left parties gaining popularity among voters by offering more radical solutions.
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