Monetary System and Macroeconomic Policy in Greece, 1833-2003

Currency is one of the most important of social and economic institutions. Evidently, the interrelation between monetary and economic power and stability is reciprocal. A strong and stable economy facilitates the achievement and maintenance of monetary stability; conversely, monetary stability contributes to the smooth operation of markets and transactions, and promotes savings, investment and economic growth. This paper describes the evolution of the Greek monetary system. Both international monetary developments and domestic fiscal disturbances often caused by the frequent military conflicts determined domestic monetary developments in Greece. In periods of smooth and efficient functioning of the economy, the monetary system did not face any problems. But whenever substantial economic disturbances occurred, mainly of a fiscal nature, the monetary system suffered adverse consequences, resulting in monetary destabilization, which, in turn, caused economic instability