Secret Greek system set up for drachma switch

A secret cell at the Greek finance ministry drew up plans for a payment system that could be switched from euros to the drachma at the “flick of a button”. Yanis Varoufakis, the former finance minister, was recorded saying he had been given the “green light” to set up a Plan B for Greece.

A SECRET cell at the Greek finance ministry hacked into government computers and drew up elaborate plans for a system of parallel payments that could be switched from euros to the drachma at the “flick of a button”.

The disclosures caused a political storm in Greece and confirm just how close the country came to drastic measures before Alexis Tsipras, the prime minister, gave in to demands from Eu- rope’s creditor powers, acknowledging that his own cabinet would not support such a dangerous confrontation.

Yanis Varoufakis, the former finance minister, told investors in London that a five-man team worked for months on a contingency plan to create euro liquidity if the European Central Bank cut off emergency funding to Greece, as it in fact did after talks broke down and Syriza called a referendum.

The transcripts were leaked to the Greek newspaper Kathimerini. The telephone call took place a week after he stepped down as finance minister.

“The prime minister, before we won the election in January, had given me the green light to come up with a Plan B. And I assembled a very able team, a small team as it had to be, because that had to be kept completely under wraps for obvious reasons,” he said.

Mr Varoufakis recruited a technology specialist from Columbia University who broke into the software systems of the tax office – then under the control of the EU-IMF “Troika” – to obtain data on every Greek taxpayer.

The disclosures were made to a group of sovereign wealth funds, pension funds, and life insurers – many from Asia – hosted as part of a “Greek day” by the Official Monetary and Financial Institutions Forum (OMFIF). Mr Varoufakis told The Daily Tele

graph that the quotes were accurate but some reports in the Greek press made it look as if he had been plotting a return to the drachma from the start. “The context of all this is that they want to present me as a rogue finance minister, and have me indicted for treason.

“It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history,” he said.

“It totally distorts my purpose for wanting parallel liquidity. I have always been completely against dismantling the euro because we never know what dark forces that might unleash in Europe,” he said. The goal of the hacking was to enable the finance ministry to make digital transfers at “the touch of a button”. The payments were to be IOUs based on an experiment by California after the Lehman crisis.

A parallel banking system of this kind would allow the government to create euro liquidity and circumvent what Syriza called “financial strangulation” by the ECB.

“Very soon we could have extended it, using apps on smartphones, and it

could become a functioning parallel system. Of course this would be eurodenominated, but at the drop of a hat it could be converted to a new drachma,” he said.

Mr Varoufakis claimed the cloak and dagger methods were necessary since the Troika had taken charge of the public revenue office.

He said any request for permission would have tipped off the Troika immediately that he was planning a coun- ter-attack. He was ready to activate the mechanism the moment he received a “green light” from the prime minister, but the permission never came.

“When the time came, he [Mr Tsipras] realised that it was just too difficult. I don’t know when he reached that decision. I only learned explicitly on the night of the referendum, and that is why I offered to resign,” he said.

He insisted that his purpose had always been to go on the legal and financial offensive within the eurozone – placing the eurozone creditors in a position they would be acting outside EU treaty law if they forced Grexit – but nevertheless suggested Syriza did have a mandate to contemplate more radical steps if all else failed.

“I think the Greek people had authorised us to pursue energetically and vigorously that negotiation to the point of saying that if we can’t have a viable agreement, then we should consider getting out,” Mr Varoufakis said in the tape.