In the upcoming months, Greece needs to repay all the money it obtained from the International Monetary Fund (IMF) in order to stay in the euro zone.
Last week, Greece announced the repayment of a € 200 million loan to the IMF, following years in which the government struggled to recover its economy. Additionally, Greece has yet to pay back larger debt of € 750 million on May 12, although it is unknown how the country will manage to return the money.
According to a recent report by Reuters, the European Central Bank (ECB) is developing an IOU-based secondary virtual currency that would be used to pay wages and other obligations.
However, experts at ECB consider the new currency could pose threat to the future of Greece in euro zone and put further pressure on banks. By paying the workers in IOUs instead of Euros, people would then likely to plunder their savings.
It would be then necessary to tap rising emergency liquidity funding or increase the capital base, but the problem is that banks could not use IOUs as security because the ECB would not accept them.
However, there is one solution that could be used by the Greek government, CNBC reported. Last month, Varoufakis held a secret meeting with finance ministry officials where he unveiled his thoughts on how bitcoin and its technology could influence the Greek economy.
“This is the smartest move to beat corruption and tax evasion, all transactions will be recorded to the Greek Ministry of Finance new secure and dedicated Bitcoin servers and we ‘ll be able to track transanctions at any given moment,” he said at the time.
As of September 2014, the amount of financial assets owned by Greece totaled €86 billion. In order to solve its financial issues, Greece has to find a way to monetize these assets and at the same time retaining ownership. And the digital currency could be a solution to this problem.
The government can use the blockchain to develop a cryptocurrency that will be utilized for paying government workers as well as for repaying debts.
To realize this plan, Greece has to put a part of these assets into a trust and then create a virtual currency that will be supported by this basket of assets. It would be a combination of cryptocurrency and an asset-backed security.
The approach will likely result in certain benefits for the country. At first, Greece would manage to maintain its assets, thus reducing privatization. Besides, it would use the new cryptocurrency to pay wages and employees would be able to use it at local businesses, what leads to an economic increase. Furthermore, the hybrid assets could be held by Greek banks and would help to improve banks balance sheets.
In order to realize the idea, the government has challenged the blockchain technology community to offer a prototype of the blockchain that will help to implement the new cryptocurrency. Bitcoin startups were given a chance to develop and present new products based on the technology.