Magic money unlikely to bring fairytale ending to epic battle in Greece
Published 09/07/2015 | 02:30
How much is a €10 banknote worth? The physical piece of paper itself is effectively worthless. But because everyone accepts that these banknotes are worth €10, we can buy all kinds of stuff with a value up to that amount with the notes. This is the magic of printed money.
But the magic only works as long as people are confident that the same pieces of paper will be accepted as being worth the number that is printed on them. If that faith evaporates, people begin using other things as a "means of exchange". The last time that happened in Europe was after World War II. Then, cartons of cigarettes and nylon stockings were used as currency amid the devastation.
Most people know that having a reliable currency is vital - despite their vote last Sunday, opinion polls show that a big majority of Greeks want to keep the euro rather than change over to a currency that doesn't (yet) exist.