Greece likely to issue a form of parallel currency

Indeed, the Greek government is already running a primary budget deficit and no other form of funding will be available in the coming weeks. It is worth noting that if the ECB was to decide to reduce or stop allowing Greek banks to roll-over Greek TBills, the issuance of IOUs would become even more crucial for the government.

On top of that, we believe that the IOUs may also be used to help alleviate the financial stresses on Greek banks, such as the issuance of promissory notes in IOU terms in return for the redenomination in IOUs of part of banks' liabilities. In this case, the IOUs would most likely end up as the new Greek currency, says Societe Generale. 
Indeed, living with closed banks and frozen deposits cannot last long. The government would eventually offer (with a discount) the chance to convert blocked time-deposits in euros into cash deposits in IOUs. The government would just have to print new banknotes and coins to allow free deposit withdrawals.

The idea of a parallel currency is not uncommon. In particular, IOUs have been used during periods of financial and economic stress, with extreme examples as some US states andArgentina. The academic literature presents several forms of parallel currency, with some creating a new form of securities, backed by the government's ability to pay back its debt and others backed by future taxes.

Unlike the former, the second category would have the advantage of not increasing the amount of debt owed by the Greek government. For example, the Greek government couldpay part of civil servant wages, benefits and pensioners in IOUs and part in euros. The IOUs could become a sought after asset if they offered a discount on tax payments. The IOU would be used in the Greek territory only. It could be used to trade basic needs