The economic problems currently being faced by Greece may result in the country pulling out of the EU and re-establishing its old currency – the drachma – instead of the euro. Banks in Europe are scrambling to make provisions for such an eventuality. Recently, the leading German travel operator TUI sent out letters to hotels in Greece asking them to renegotiate their rates in drachmas to avoid losses in case Greece pulls out of the euro.
But currency woes are not limited to Greece. On November 24, the credit rating agency, Moody’s, downgraded Hungary’s ratings to “junk” – and the value of the Hungarian currency – the florint fell by 6% to 238 Florint per US$. Although Hungary is part of the European Union, it has not yet integrated its currency with the Euro. Another ratings agency, Fitch, declared on Friday, Nov 26, that Portugal’s government bonds were worth “junk” exacerbating the already difficult economic scene in Europe.
Italy lost its Prime Minister Berloscuni due to their economic woes while Spain and Belgium are also facing similar problems.
If Greece starts using the drachma, travelers will benefit from lower prices and Greek tourism may see a big inflow of tourists.
