DEFINITION of 'Greek Drachma '
The former basic unit of currency in Greece. The Greek Drachma was an ancient currency unit used in many Greek city states. The drachma was reintroduced in 1832 following the establishment of the modern state of Greece; it replaced the phoenix, the first currency of the modern Greek state that was introduced in 1828.
BREAKING DOWN 'Greek Drachma '
After Greece was liberated from Germany in 1944, old drachmae were exchanged for new ones at a rate of 50 trillion to one, issued as one, five, 10 and 20 drachmae banknotes. In 1953, Greece joined the Bretton Woods system in an attempt to slow inflation. The following year, the drachma was revalued at a rate of 1000 to one, pegged at 30 drachmae to one U.S. dollar.
The three modern Greek drachmae were replaced by the euro in 2001 at the rate of 340.750 drachmae to one euro. This exchange rate was fixed on June 19, 2000, and the euro was introduced shortly thereafter in January of 2002. Following the Greek debt crisis that erupted in 2009, there have been arguments for and against Greece eliminating the euro and re-introducing the drachma as its national currency.