Would temporary capital controls for Greece work?

Has anyone written a good blog post about this topic?

If you allow redemption of accounts into currency, the currency can be mailed, carried across borders, sent by PayPal against credit cards, sent by Western Union, or many other options.  It would be hard to shut them all down at once.  The Greek government could try.  Carrying currency across the border would be the hardest one to stop, although it might not be the most important external channel for getting funds out of the country.  They could search people at the border, much as the U.S. government now searches us for liquids before a plane flight.

A second scenario freezes bank accounts and doesn’t worry too much about currency leakage.  Instead it stops people from adding to their currency holdings, or at least tries to.  The Greek economy then has to do without currency withdrawals for some time, until the new drachma currency is ready.

Which is the more feasible option?  Is either at all an option?  Am I overlooking an alternative?  Without some kind of capital controls, a move away from the euro simply drains the country of its euros.


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