Unlike many other devaluations of the mid-1990s and late-1990s, the drachma’s devaluation was not followed by further rounds of speculative attacks, nor by a financial crisis. Unlike other devaluations, it was not followed by contraction in economic activity, but by an acceleration.
Moreover, and again in contrast with the other devaluations of this period, the impact of the drachma’s devaluation on inflation was strictly contained. What accounts for the drachma’s successful exit from one central rate to another? In my view, the key ingredients of the successful devaluation were the following.