Berlin – In the European financial crisis, many concepts emerge that are not easy to digest. What do the different keywords mean?

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Image: Euro coins as gears


For fear of bankruptcy, the Greeks have long ago raised billions of euros from their accounts or made them abroad. If the danger continues, it comes to the acute bank run: The customers try en masse to empty their accounts. The banks would bleed out, they could lend the companies no more money, the economic activity succumbs.

Capital controls

In order to prevent the run of the bank, the banks would have to be temporarily closed completely and online transfers would be interrupted. If they open again, foreign transfers would be prevented and withdrawals at the machine would be limited to smaller amounts. This is how it was done in Cyprus three years ago. The last capital controls were canceled there only this spring. The massive intervention would require the government in Athens to decide on an emergency law almost overnight – it can not be forced to do so by the euro partner countries. “The Greeks have not prepared anything,” states an EU diplomat.


Whether a state is bankrupt is usually determined by rating agencies by determining a so-called credit event. However, even if that does not happen, Athens will not pay its installment to the International Monetary Fund (IMF) on 30 June, according to ING chief economist Carsten Brzesk. Because this is not about market papers. Crucial is not the market, it says, however, in euro circles: If Athens does not pay back to the IMF, the ECB could actually no longer accept Greek bonds as a pledge and would have to turn the drip for the Greek financial system. The banks would have to be transacted practically overnight.


A bankruptcy Athens would not automatically the Euro-Aus for Greece – so the Grexit – the result. In fact, expulsion from the Euro Club by the remaining members is only possible if the Greek Government itself agrees in the end: a new treaty must be concluded – signed by Athens. But a large majority of Greeks want to keep the euro. If they remain in the euro without further financial assistance from the ECB and euro countries, banks and the economy will dry up. So the government would be forced to Grexit and return to the drachma. A chaotic transitional phase of at least half a year would be the result, estimates economist Carsten Hefeker from the University of Siegen.

parallel currency

A kind of middle ground between euro and Grexit would be the introduction of a parallel currency: Because the state lacks cash, he pays officials and pensioners at least partially with promissory notes. To do business at all, traders and service providers would accept the promissory notes as a means of payment, explains the French financial scientist Eric Dor. Due to the risk, however, the promissory notes would be less valuable than the euro. The promissory notes are called in the financial world “IOU”, after the English “I Owe You” (I owe you). California successfully resorted to the aid in the summer of 2009 to bridge a bankruptcy phase.


The term was invented by former German bank chief economist Thomas Mayer and in May he explained his concept to Greece’s finance minister Giannis Varoufakis. “Geuro” notes would provide Athens financial latitude and strengthen the competitiveness of the country by the devaluation, so his theory. However, the bill would only come if the international creditors defer their claims and the Greek banking system would continue to be supported by the euro bailout, which is considered excluded by experts. A return from the Geuro to full membership of the European Union would only succeed if Athens generates a budget plus through economic reforms and can gradually trigger the promissory notes.

Primary surplus

The generation of a primary surplus – ie an increase in the budget before deduction of debt repayment – is the deciding factor in the recovery of public finances: if Athens earns more by taxes and privatizations than it spends, it can gradually pay off its debts. The previous government has achieved a surplus through drastic cuts. Instead, to achieve a plus through higher government revenues, can only succeed if the trust returns. “There is no hint for that,” says ING expert Brzeski.

debt cut

Both Athens and the IMF want to persuade the eurozone countries to abandon at least some of their demands in order to enable the over-indebted country to restart. The Greek government has signaled to implement the required reforms in a haircut. In addition to the IMF, many experts also consider it a waiver of the only viable option.

However, that would amount to a third rescue package. The planned special summit of the euro states would have to make a statement for it, to draft a new program and to secure debt sustainability in an application Athens. For this, Chancellor Angela Merkel (CDU) would need the backing of the Bundestag.