What can you expect if Greece exits the euro zone during your vacation? Photo by Adam Baker.

It might be peak season for travel to Greece right now but the euro zone crisis has certainly thrown a spanner in many people’s travel plans. Instead of worrying about which white bikini to pack or how many islands to visit, travelers are faced with bigger concerns – like what will happen if Greece leaves the euro zone? Or worse, what will happen if it leaves the euro zone while you’re there? Will you be able to access your money? Will there be chaos? Should you go to Greece at all?

Since I’m actually heading to Greece this summer, I’ve been asking a lot of these questions myself. Unfortunately, much of the advice flying around the internet has been of the fear mongering variety. For example, one bit of advice I saw repeated over and over urged travelers to only accept certain kinds of euro banknotes. You see, all euro notes are printed with a letter that indicates which country’s central bank issued them – and the advice suggests avoiding any currency issued by the weaker euro zone nations like Malta, Cyprus, Portugal, Italy and of course, Greece. That way, if Greece exits the euro zone, you won’t be stuck with supposedly “worthless” euros.

Frankly, this kind of talk just causes unnecessary concern for tourists. After all, a euro note is a euro note, regardless of where it was issued. Add to that the fact that ATMs will spit out notes at random; it doesn’t matter what euro zone country you’re in, make a withdrawal and you’ll likely receive banknotes that originated from all over Europe. If you take a look at the graph below, you can see that only about one-fifth of the euro notes circulating in Greece right now were issued by Greece – a bigger percentage of notes were actually issued by Germany and carry a German serial number. It seems highly unlikely that anyone would declare all Greek-issued euro notes null and void given the diffusion of these notes all over Europe.

 

Withdraw cash in Greece and you’ll receive notes issued by many different nations. Source: http://en.eurobilltracker.com/diffusion/

 

So what’s an anxious traveler to do?

Some interesting advice I’ve seen comes from British travel journalist Simon Calder, who advocates traveling to Greece with a decent amount of cash on hand and heading there with a tour company. Here’s why:

First, you can offload your risk exposure concerning personal safety or wholesale disruption by booking a package holiday; the tour operator has a duty of care towards you. Next, cash is king. Credit or debit cards could temporarily stop working during a hasty change of currency if electronic banking freezes. In contrast, people with a wad of low-denomination euros will be the most popular folk in the taverna.

The bit about carrying low-denomination currency is particularly interesting, and here’s an explanation of why he recommends insisting on receiving 5, 10 and 20 euro banknotes:

If Greece leaves the euro, the most likely interim currency is the existing euro overprinted with a Greek delta symbol (for “drachma”), or possibly with a corner clipped. The value of the Greek euro would fall by perhaps 40 per cent. While traders sort themselves out, and before a market in the Greek currency begins, tourists are likely to pay in euros but be given change in new money. Pay for a €15 round of drinks with a €50 note, and you could get back change in Greek currency worth only €20. That is why low-denomination notes are so useful.

In other words, any non-stamped euro you’d be carrying in your pocket would be considered foreign currency (but still legal tender), while stamped euros in circulation would be considered equivalent to drachmas (and therefore lower in value than the euro).

Whether or not that exact scenario would play out is anyone’s guess. There are precedents for stamping or defacing old notes to form new money – it’s what happened when the Austro-Hungarian currency union broke up nearly 100 years ago. However, it’s also possible that Greece could issue IOUs instead, similar to the Patacones that Argentina distributed during its currency crisis. But maybe Greece wouldn’t need either of those given the rumors that the country has been printing wads of drachmas in preparation for a euro zone exit.

Whatever form the new or temporary currency takes, it’s likely that as a tourist you’ll be paying with one currency and getting change back in another. That’s why I think accumulating small denomination notes is not a bad idea. Even though I’d like to believe that shopkeepers wouldn’t purposely rip off tourists, chances are that the confusion surrounding a multi-currency system could result in getting short-changed.

One last thing to note is not to hang onto the “new” currency after your vacation (other than maybe a small amount as a souvenir). The drachma could continue to fall in value so be sure to spend whatever drachmas/defaced euros/IOUs you amass before you leave Greece.

P.S. If you really buy the idea that a Greek euro note is worth less than a German or other euro note, here’s a guide on how to tell where a euro note is from. The short version: Greek euro notes are printed with the letter Y, while German notes bear the letter X.

P.P.S. The euro crisis has led to a drop in tourism, which means there are some great travel deals to be had. Here’s some further reading about why it’s a good time to travel to Greece.

Are you traveling to Greece anytime soon? What special precautions are you taking in light of the euro zone crisis? 

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