“They will likely pass a law that currency conversion must be at the government rate”
That fixed rate business didn’t work out so hot for Venezuela. All it did was drive the economy (such as it was) underground and halt all business dependent upon foreign supplies, which is pretty much most business in Venezuela. The only reason Venezuela hasn’t collapsed altogether is that it’s a major oil producer, so it at least has something it can trade for some hard foreign currency, whereas Greece actually has to import their oil and gas.
No matter how the Greek government pegs the Drachma, it’ll be worthless outside of Greece and nearly worthless inside of Greece. The result will make what’s happening in Venezuela look like a picnic compared to what’s going to happen in Greece.
Typically yes, but this would optimally be done as part of a phase into a new program.
The most successful recovery of a collapsed currency was the move from the hyper-inflated Papiermark, through the Rentenmark, and into the Deutschmark that happened in the Weimar Republic. But Greece is several steps before even this could happen.
The way it worked in Weimar, during the collapse of the fiat Papiermark, was to set up a gold backed currency, but only for use by the government, banks, and major corporations, not the public. This was the Rentenmark, which was very stable as a currency, and allowed them to get some order back in the economy.
Once this was done, the Reichmark was introduced for public use, also as a gold backed currency. It was so very stable that even the Nazis retained it throughout WWII.
But after Greece has converted back to the Drachma, exchanging it for a lot of Euros held by the public in phase I, (this is where the currency conversion law comes into play) then phase II makes most conversions done mostly at the government and banking level.
The big goal is to prevent a big rush of Euros or Drachmas entering or leaving the country.
Phase III is inflation austerity. It could end up with a ratio of 10,000 Drachmas to 1 Euro. Then a currency devaluation, so that 10,000 Drachmas is now equal to 10 “New Drachmas”.
It’s quite a process.