Note: This currency has been replaced by the Euro.
Overview
The Greek Drachma (GRD) was the official currency of Greece prior to the inception of the Euro in 2002.
Greece is a country in southeastern Europe, and shares land borders with Albania, the Republic of Macedonia and Bulgaria to the north, and Turkey to the east. The Aegean Sea lies to the east of mainland Greece, the Ionian Sea to the west, and the Mediterranean Sea to the south.
Economy
The Greek economy (the gross domestic product, GDP) expanded at an average annual rate of 4% from 2004 to 2007 and 2% in 2008 (at constant 2000 prices), one of the highest rates in the euro area. However, in 2009 Greece’s GDP fell by -1.9% due to the economic crisis, with steeper declines in subsequent years due to the country’s sovereign debt crisis.
In late 2009, the global financial crisis and uncontrolled public spending precipitated a sovereign debt crisis for the country, and an austerity package was imposed by the EU and the IMF on the Greek government. These austerity measures were greeted with fury by the Greek public, and lead to riots and social unrest. They also brought on a recessionary economy, and as a result the country's debt to GDP continues to rise rapidly. This crisis is one of the most serious faced by the Greek economy since the restoration of democracy in 1974.
History
Greece now uses the Euro, but until 2002 it used the Drachma during several periods in its history, dating back to ancient, classical, and Hellenic times.
The first modern Drachma was introduced in 1832, soon after the establishment of the modern state of Greece. It replaced the Phoenix at par. The Drachma was subdivided into 100 lepta.
The first copper coins were in denominations of 1, 2, 5 and 10 lepta; silver coins in denominations of ¼, ½, 1 and 5 drachmae; and a gold coin of 20 drachmae. The 1 drachma coin weighed 4.5 grams and contained 90% silver; the 20 drachma coin contained 5.8 g of gold.
During the German-Italian occupation of Greece from 1941 to 1944, catastrophic hyperinflation and looting of the Greek treasury caused banknotes in higher and higher denominations to be issued, culminating in a 100,000,000,000-Drachma note issued in 1944.
In November 1944, after Greece was liberated from Germany, old Drachmae were exchanged for new Drachma at a rate of 50 billion to 1. The government issued notes of 1, 5, 10 and 20 drachmae and the Bank of Greece issued 50 -, 100 -, 500 -, 1000 -, 5000 -, and notes of 10,000 drachmas. Only paper money was issued.
This second Greek Drachma also suffered from high inflation, so the government later issued 100 -, 500-, and 1,000-drachmae notes, and the Bank of Greece issued 20,000 and 50,000 drachmae notes.
In 1953, Greece joined the Brent Woods system in an effort to stop inflation. In 1954, the Greek Drachma was revalued at a rate of 1,000 to 1. The new (third) Drachma was pegged to the United States Dollar at 30 Drachmae = 1 USD.
In 1973, the Brent Woods system was abolished. For the next 25 years the official exchange rate gradually declined, reaching 400 Drachmae to 1 U.S. Dollar.
On January 1, 2002, the Euro officially replaced the Drachma.
