Mr. Colm McCarthy:

Yes, the stuff was still regarded as roubles and was used to purchase real goods and services in Russia in exchange for these claims against the central bank money that had been created in Kiev and Belarus, etc. Needless to say, the Russians got tired of this after a while and said "that's all over". Of course, people got very fond of creating money, as they do. The region in question ended up with huge hyperinflation. Brand new currencies had to be established, and were established, in Ukraine, Belarus, Kazakhstan and so on. The whole thing was chaotic. It was a very costly way to break up a currency union.

The circumstances were worse in Yugoslavia because there was a war, which is a really bad way to break up a currency union. Somewhere I have a 5 billion dinar note that was presented to me with great ceremony by fellows in the central bank in Zagreb. I might have lost it. It is worth about sixpence. There was phenomenal hyperinflation in the region. There are currency unions that have broken up. If there is some kind of cataclysmic event that breaks up the eurozone - it would really have to involve Italy or France going bust, rather than expendable places like Portugal - I hope and presume it will be managed. I think the reason Mr. Tsipras ultimately threw in his hand relates to a problem encountered by individual member states in the system.

I am sure he was advised he did not have any cards. It is very difficult to create a new currency in competition with an old one that is already in circulation and very credible. If Texas decided to go independent, it would be up against it in trying to introduce a new currency in competition with the dollar. It would be a different story if one were to try to introduce a new currency in Croatia in competition with a currency that has 5 billion printed on a note which is the price of a newspaper. The authorities in Greece would probably not have succeeded in getting their people to hold a new currency. In all the states around the Balkans that have currencies, the balance sheets of the banking systems are mostly in euros. That is true is Croatia and in Serbia. Serbia has a currency called the dinar and Croatia has a currency called the kuna. Croatians use the kuna for buying newspapers and cigarettes but the currency that is held in banking matters is the euro. It is similar to a common feature in Latin American, which is called dollarisation where transactions in the economy are largely dealt with in a foreign currency.

What can countries do that are worried that something like this might happen? A country can either try and introduce a currency of its own in adverse circumstances, which would be incredibly difficult for a country like Greece - it could use it as IOUs for paying wages but that would be about it - or a country could see if there is an alternative foreign currency it might use, at least temporarily, whose central bank might be more accommodating than the one in Frankfurt. This country has options in that regard that Greece does not have.