“I can see the rest of the monetary union declaring that all Greek issued Euros are null and void.”
That would be like declaring coins with a San Francisco mint mark unusable because CA is in the crapper.
You have a point. But those Greek Euro coins and notes eventually flow through the banks. They could be removed from the money supply at that point.
The big point here is that if Greece leaves the monetary union and all of the Euros they printed and minted stay in the money supply then their effect on the Euro will still be there. Remove the traces of their coinage and printed versions of the Euro and you increase the value of the remaining currency as there are fewer coins and bills.
It’s a type of deflation if you will.
Dang it - I knew I should've read further down the thread. You beat me to this analogy.