Greece and the eurozone will make one last attempt to make progress towards an urgently needed bailout deal on Tuesday.
Here are three alternative scenarios:
1) Greece stays in the eurozone
Tuesday's summit is Greece's final chance to propose a new reform plan that could open the financial spigot. The journey looks perilous but this outcome isn't impossible as at the end of June, Greek Prime Minister Alexis Tsipras was ready to accept the reforms demanded by Greece's EU/IMF creditors (increases in sales tax and reform of the country's pension system). But in exchange he wanted some reduction in the country's huge €322 billion ($475 billion) debt burden (that stands at 177 per cent of Greece's GDP). But Greece's international lenders fear that writing down Greece's dept would encourage demands for similar generosity from countries such as Spain.
2) A parallel currency (IOUs)
Under that case the Greek government would be forced to start printing IOUs (abbreviated from the phrase “I owe you”), a form of alternative mean of payment so that the state will be able to pay salaries, pensions and suppliers. According to Reuters, several eurozone officials unfolded this option on Friday, assuming that there would be no agreement between Greece and its creditors and that the country will run out of cash on April 20th. But although these IOUs would be used in shops and would start to form a parallel currency, their value would quickly collapse against the euro, people would want to hand over the IOUs as payment and hoard their remaining euros, which would trade at a substantial premium.
3) Reintroducing the drachma
Although Tsipras appears determined that Greece remain within the eurozone, he might be persuaded that it would be better for the country to leave the common currency, while remaining in the European Union. A Grexit might see the euro zone allow Greece to walk away from some of its debts and reintroduce the old national currency the drachma but with the goal of eventually returning to the euro zone when it has restored its economy to health. Some argue that if Athens dropped the euro and reintroduced the drachma, the Greek economy would get a huge benefit, despite the short-term pain involved.