Former Greek finance minister Yanis Varoufakis has a piece in the Financial Times on Tuesday, defending his plans to “hack” his own finance ministry and create a mirror payments system, which could be used in the event of a banking collapse or Grexit (Greek exit from the eurozone).
He says that part of his plan was simply to use the replica tax and payments system to cancel arrears to and from the state — many Greek companies with government contracts had not been paid for months as the country was running out of cash.
Here’s a snippet from the FT piece:
Suppose, for example, Company A is owed €1m by the state and owes €30,000 to an employee plus another €500,000 to Company B, which provided it with goods and services. The employee and Company B also owe, respectively, €10,000 and €200,000 in taxes to the state. In this case the proposed system would allow for the immediate cancellation of at least €210,000 in arrears. Suddenly, an economy like Greece’s would acquire important degrees of freedom within the existing European Monetary Union.
He adds that the plan would have eventually provided a “fiscally responsible increase in government liquidity and a quicker path back to the money markets to which governments, such as Greece’s had lost access,” and could have been used as a smartphone app and designated cards.
What he doesn’t mention in the FT piece is anything about the possibility that it would be used for the purpose of bringing in a new currency. On the original recording, Varoufakis says “this would be euro denominated, but at the drop of a hat it could be converted to a new drachma.”
He also describes himself as “committed to unlimited openness and full transparency” in the FT piece, which is a bit rich considering that he was conducting a private call with global financiers and a former Conservative British chancellor in the first place. Varoufakis can be clearly heard saying “You can’t tell anyone that… Even if they do, I’ll deny I said it” on the recordings.
It’s not so much the detail of Varoufakis plans that is aggravating — it’s actually a very good thing that someone was planning for the potential Greek exit, given that it looked very likely at one point — it’s the feigned commitment to transparency after the details of a private call were leaked.
Varoufakis finishes on a note that even a lot of his critics can agree with:
There is a hideous restriction of national sovereignty imposed by the troika of lenders upon Greek ministers who are denied access to departments of their ministries pivotal in implementing innovative policies. When sovereignty loss, due to unsustainable official debt, yields suboptimal policies in already stressed nations, one knows that there is something rotten in the euro’s kingdom.
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