On 29 May 2012 the National Bank of Greece (not to be confused with the central bank, the Bank of Greece) warned that "[a]n exit from the euro would lead to a significant decline in the living standards of Greek citizens."
According to the announcement, per capita income would fall by 55%, the new national currency would depreciate by 65% vis-à-vis the euro, and the recession which Greece has been in for five years would deepen to 22%.
Furthermore, unemployment would rise from its current 22% to 34% of the work force, and the inflation, which is currently at 2% would soar to 30%.
According to the Greek think-tank Foundation for Economic and Industrial Research (IOBE), a new drachma would lose half or more of its value relative to the euro. This would drive up inflation, and reduce the purchasing power of the average Greek.
At the same time, the country's economic output would drop, putting more people out of work where one in five is already unemployed. The prices of imported goods would skyrocket, putting them out of reach for many.
Analyst Vangelis Agapitos has estimated that inflation under the new drachma would quickly reach 40 to 50 per cent to catch up with the fall in the new currency's value. To stop the falling value of the drachma, interest rates would have to be increased to as high as 30 to 40 per cent, according to Agapitos. People would then be unable to pay off their loans and mortgages and the country's banks would have to be nationalised to stop them from going under, he predicted.