If Greece quits the euro, the European and global economies may face a disaster. But there is still time to reverse this destructive dynamic with a simple solution that has not been discussed much so far. Instead of pushing Greece out of the eurozone, Germany could voluntarily leave and reissue its deutsche mark, reports CNN.

Up to now, problems of the euro and the European Union have been solved, focusing on the debt and competitive weaknesses of the so-called peripheral countries (Greece, Italy, Spain, Portugal and Ireland). However, such issues were dealt with long before the euro was introduced. Back then it was done via periodic devaluation of the currencies of the less-competitive countries against those of the more competitive countries, especially against the deutsche mark.

The problem is not the weaknesses of the periphery, but the excessive strength of Germany. As long as the rest of the eurozone countries are in the euro block hand in hand with Germany, the only way for them to become more competitive is to launch severe austerity measures. But it is not clear whether the eurozone will be able to sustain the social and political pain of austerity long enough to near Germany’s competitiveness.

The alternative is for Germany to go back to its deutsche mark. That would immediately result in appreciation of the German currency and competitive devaluation of the euro for the remaining eurozone countries.

The most essential element of a euro rescue is a euro bond guaranteed jointly by all eurozone member countries. However, Germany has been strongly opposing to that, but if it returned to the deutsche mark, the obstacle would be removed.

If such a scenario comes true, Germany would still remain committed to the eurozone for a number of reasons. It would need the single currency block to buy its increasingly expensive exports. The Bundesbank (Germany’s central bank) would undoubtedly sell deutsche marks against euros to mitigate appreciation. The accumulated euros would then be invested in the new euro bonds. This in turn might inspire the European Central Bank to initiate quantitative easing programs that would stimulate the entire EU economy.

Ref: 105.105.105.1525