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On Jul 16, 2015, at 2:01 PM, Andrew Pollack via Marxism
marxism@lists.csbs.utah.edu wrote:
The SWIFT exchange was in the news when Iran's access to it was threatened,
and was mentioned in passing today in a Times article now that sanctions
will be loosened.
https://en.wikipedia.org/wiki/Society_for_Worldwide_Interbank_Financial_Telecommunication
Again, I’m not an IT expert, but it seems to me what’s been overlooked in this
discussion is the distinction between the instantaneous electronic transfer of
funds made possible by modern technology and the much longer timeframe required
for the subsequent issuance of new coins and banknotes.
Louis has made much of the time factor in introducing and distributing a new
currency. I’m not clear as to what precisely he’s referring to when he asserts
there are years of complicated computer programming required to implement the
change.
The origin of the eurozone is instructive in this regard. The conversion to the
euro of 11 sovereign currencies involving hundreds of banks and hundreds of
millions of Europeans was done at a keystroke and trading in the new currency
began immediately. All that what was required was for the central banks in each
country to fix the respective exchange rates at which the old currencies would
be exchanged for the euro, and for the commercial banks to implement this
change in depositors’ accounts. This conversion rates were the subject of
negotiation between the central banks and with the new European Central Bank.
The euro was launched on 1 January 1999, when it became the currency of more
than 300 million people in Europe. For the first three years it was an
invisible currency, only used for accounting purposes, e.g. in electronic
payments. Euro cash was not introduced until 1 January 2002, when it replaced,
at fixed conversion rates, the banknotes and coins of the national currencies
like the Belgian franc and the Deutsche Mark.”
In recognition that cash was still widely used, he old currencies continued to
coexist with euro transactions and were gradually phased out over a three year
period with minimal disruption to the financial system.
Even today, cash is by far the most widely used means of payment for retail
transactions in the euro area in terms of the number of transactions, although
in terms of value it has a significantly smaller share. In both respects,
however, the role of cash has been gradually declining in recent decades, while
the use of debit and credit cards has been growing, a trend that is expected to
continue.”
For more detail, see:
https://www.ecb.europa.eu/euro/intro/html/index.en.html
A Grexit would be politically difficult - but not, it appears, technically
difficult - were it not an orderly process undertaken in concert with the
eurozone.
In this connection, I linked to an article yesterday which explained:
The government and banks could work together to convert all bank deposits from
euros into drachmas, either overnight or over a set period of time. Practically
speaking, this would mean a person with 100 euros in their bank account on
Tuesday could find that they instead have 100 drachmas in their account on
Wednesday. There wouldn’t be any physical drachmas available yet, but the money
would exist digitally…If the Greek government resolves to push ahead with its
drachma currency, it would eventually have to print banknotes and coins. The
process of designing and printing new banknotes would take at least a year,
according to Bernd Kuemmerle, who is head of the banknote business division at
German-based Giesecke Devrient, a leading global banknote producer.”
This seems to me to be consistent with the apparent technical ease of
converting drachmas into euros in 1999, except the process would work in
reverse.
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