Question

Please use the economics knowledge you have learned so far to analyze the case below. You can propose your own questions and then answer them. Remember, there is no absolutely correct answer to this exercise. Its purpose is to provide you an opportunity to demonstrate your ability to think like an economist by applying economic principles to interpret the logic of a real-world phenomenon.

Can Greece Function without Banks?

In 2001, Greece and most other European countries abandoned their individual currencies in favor of the euro. Following the 2007–2009 financial crisis, the Greek government had trouble paying interest on the bonds it had issued. In 2015, Greece appeared to be in danger of defaulting on its debts. People withdrew large amounts of euros from Greek banks. The Greek government decided to close the banks for three weeks and limit withdrawals from ATM machines. Many businesses insisted on being paid in cash, which consumers had trouble finding. Greece’s situation shows what can happen when a country’s banking system breaks down.

Answer 1

Society in greece can surely exist without banks but the matter here is about a nations economic growth,and without banks that's very difficult, hundreds of years back when there was barter system and no financial institutions existed.

It's simple that the economy will find it difficult to grow.

Without banks business can't take loans to expand their businesses.

Suppose if there were no banks then

• Where would people of Greece go to borrow money?
• What would they do with their savings?
• Would they be able to borrow or save as much as they need, when they need it, in a form that would be convenient for them?

Without banks or financial institutions the economy might face economic crisis.