What Is the Greek Drachma?

The Greek drachma is the former basic unit of currency in Greece. The Greek drachma was also an ancient currency unit used in many Greek city-states. The drachma was reintroduced in 1832, following the creation of the modern country of Greece, where it replaced the phoenix, the first currency of modern Greece introduced in 1828. In 2002, the drachma was subsequently replaced by the Euro and ceased to be legal tender.

Key Takeaways

  • The Greek Drachma was the currency of Greece before it was replaced by the Euro common currency.
  • The drachma was also the ancient money of the Greek empire and city-states.
  • One drachma is broken down into 100 lepta.

The Basics of the Greek Drachma

One drachma is divided into 100 lepta. Between 1917 and 1920, the Greek central bank printed paper drachma notes in denominations of 10 lepta, 50 lepta, 1 drachma, 2 drachmae, and 5 drachmae. Large denominations followed, with the 1000-drachma note appearing in 1901, and the 5000-drachma note in 1928. The Greek government issued smaller valued notes between the years 1940 and 1944, with denominations ranging from 50 lepta to 20 drachmae.

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 reintroducing the drachma as its national currency by leaving the EU, in a process dubbed "Grexit."

History of the Greek Drachma

The National Bank of Greece issued drachma banknotes from 1841 to 2001, after which time Greece joined the Euro common currency. Drachma note denominations ranged from 10 to 500 over much of its existence, while smaller denominations of 1, 2 and drachmae were issued earlier. Initially, 5 drachma notes were created simply by cutting a 10 drachma note in half.

After Greece won its national independence from the Ottoman Empire in 1828, the new nation issued the phoenix as its currency; however, it was short-lived—only in use for four years. In 1832, the drachma was re-introduced harking back to its ancient origins. The first drachmae notes were impressed with the image of King Otto, who reigned as modern Greece’s first king from 1832 to 1862.