Greece mulling nationalizing banks, adopting new currency: Sources

Greece is ready to nationalize its banks and adopt a new currency to pay its bills, as Athens is mulling new measures to pay its debt to the International Monetary Fund (IMF), government sources have reportedly said.

The sources said on Friday that the Greek government would, however, not take the step if the eurozone member states back down over the austerity measures they are pushing Athens to implement.

Sources have also warned that the governing Syriza Party could also choose not to make a payment to the IMF due later this month under its bailout agreement in order to use the money for paying state employees’ wages and benefits.

“We are a left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” an unnamed official told The Daily Telegraph.

The official added that the government “may have to go into a silent arrears process with the IMF,” warning that the move “will cause a furor in the markets and means that the clock will start to tick much faster.”

Cash-strapped Greece has until April 9 to pay the IMF 460 million euros ($500 million) to meet the conditions of its loan deal while Athens is seeking to negotiate what it regards as a better agreement with its creditors.

The source, meanwhile, accused Greece’s creditor countries in the European Union of trying to put the government in a position “where we either have to default to our own people or sign up to a deal that is politically toxic for us. If that is their objective, they will have to do it without us.”

Another source told The Telegraph that the Greek government would “shut down the banks and nationalize them, and then issue IOUs” (document acknowledging a debt owed) if it has to, in case the negotiations fail, adding, “What we will not do is become a protectorate of the EU.”

The IOUs could essentially be a new form of currency for Greece, which formally started to use euro in 2002.

The paper also quoted one official as saying that Athens thinks its eurozone creditors are trying to topple the Syriza-led government.

The IMF and the EU experts are now inspecting a list of economic reforms prepared by Athens in a bid to give another 7.2 billion euros in loans to the country.

Greece’s creditors are urging the country to cut pensions and go ahead with civil service layoffs and a number of major privatizations, which the government expressed its opposition to in January.

MR/HJL/SS

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