When some of us opposed early and wide monetary union within the EU we said joining the Euro was joining an Exchange Rate Mechanism you could not get out of. Some went further, and said the danger of joining the Euro was locking yourself into a common European house and throwing away the key when the house might catch fire.
It is not easy for any one country to leave the Euro. It is best done rapidly, taking markets by suprise and presenting them with a fait accompli. It is easy to redonominate all bank account money in any given country by a press of a button. It takes longer, allowing people to trigger a run on banks, to print the new currency and circulate the new bank notes. Why would people hang around with money on deposit in a Greek bank, if they thought a 15-30% devaluation was just around the corner? They would want to pocket their Euro notes and expect them to be honoured.
It would be fairest to devalue the currency of all Greek bank account holders, but not all holders of Y serial number Euro notes. Once the drachma replaces the Euro as the legal tender in Greece, Greek holders of Euro notes would be able to sell them into drachmas. The Greek state would be wise to impose a limit on how many Euro notes a Greek citizen could convert into drachmas, imposing a lower rate of exchange on excess. There could be some leakage by Greek citizens travelling abroad to exchange larger sums. The Greek state should print a starting level of drachma notes as quickly as possible to cut down the time people had to play games against the devaluation. Once the new currency had been announced it would be possible to limit cash withdrawals pending the full print run of drachma notes.
All debts, contracts and agreements in Greece denominated in Euros would automatically be changed into drachmas by law. International contracts including Euro debt owed by Greece to foreigners would require negotiation by both sides where the governing law was not Greek law.
The new drachma should be allowed to find its own level in the markets against the Euro. The Greek central bank would need to make a clear statement of its intent vis a vis the issue and control of the new currency and the Greek government would need to make a full economic policy statement with guidance on proposed inflation, growth and monetary targets.
Greek people would be worse off when buying foreign goods by the amount of the devaluation. Greek goods and services would be cheaper by the amount of the devaluation. The Greek economy could start to recover as it exported more and welcomed more inward investors, holidaymakers and other sources of income and jobs.
Countries with free floating currencies do adjust more quickly to changed circumstances and to falling living standards than coutnries with pegged or shared currencies. Faster adjustment means less pain in the longer run.