Greece should adopt dual currencies: Polish central bank chief

Europe's strategy to rescue Greece from bankruptcy is "hopeless" and Athens should instead consider adopting a double currency system, Polish central bank Governor Marek Belka was quoted as saying by German daily Financial Times Deutschland.

"The country seems to need a special arrangement, perhaps for a limited time period," he told the newspaper in an interview to be published in its Thursday print edition.

"I am not calling to push Greece out of the euro, but for internal purposes one could consider a payment instrument for use within the country, in particular by the public sector."

Mr. Belka said Europe's strategy of urging Greece to drastically cut prices and wages in order to become competitive and to accept bailout packages was "hopeless."

Athens secured a new bailout package from the International Monetary Fund and the European Union after agreeing to a series of painful economic reforms and spending cuts and completing a debt swap that imposed losses of as much as 74 per cent on private bondholders.

Mr. Belka said that with a dual currency system, bank savings could be kept in euros and would not lose their value. But wages would be paid in a new currency worth less than the euro.

Mr. Belka said this "hidden devaluation" could make Greek goods and services cheaper and more competitive.

"The Greeks will have to make additional sacrifices, but at least this way it would happen in a civilized fashion," Mr. Belka said. "They must make tourism and other services more attractive. Greece must reinvent itself."