Backgrounder: Brief history of Greek drachma

With "Grexit" scenarios doing the rounds again ahead of Sunday's general elections, albeit to a much lesser extent compared to two years ago, here is a look back at the history of the drachma.

The drachma as a monetary unit goes back more than 25 centuries. It is one of the oldest currencies worldwide. In ancient times, there were periods when it was the most widely used currency across a large part of the world.

The word derives from a verb which means "grasp a handful." Initially, it referred to a handful of six iron rods (called obols) which were used as currency before the use of coins, experts at Greece's Numismatic Museum noted.

The 5th century BC Athenian coin, which became the most important denomination and inspired several future versions, was the tetradrachm, equivalent to four drachmas.

It featured the profile of goddess of wisdom Athena on one side and on the other an olive branch and an owl - a symbol of wisdom and a nocturnal bird which can see things people can't.

In subsequent centuries, this coin gradually developed into an "international" means of payment in the entire Mediterranean basin.

It was the first time in monetary history that a coin covered such a large area of distribution. It reached as far as India as a result of the conquests of Alexander the Great.

As foreign invaders gained control of Greece and ruled the country for centuries, the drachma disappeared from use.

In modern times, the drachma was reintroduced as national currency in 1832, when Greece won its independence from Ottoman rule. The new coin carried a portrait of King Otto, modern Greece's first king. The modern drachma never came close to the prestige of the ancient currency.

The new currency joined the Latin Monetary Union in 1868. It was a bold experiment launched by France which ended with World War I. By 1893, Greece had already witnessed a national bankruptcy due to over borrowing and over spending.

The worst period for the modern drachma was World War II. During the Nazi occupation of Greece and amidst unprecedented hyperinflation, Greeks were struggling to survive with 100 billion drachma notes in their pockets, economist Yorgos Komarinos noted.

The post-war drachma coins and paper bank notes issued by the central Bank of Greece also suffered from high inflation.

In 1954, in an effort to halt inflation, the country joined the Bretton Woods fixed currency system until it was abolished in 1973.

In 1954, about 30 drachmas equaled 1 U.S. dollar. From 1974 onwards, it devalued over the following three decades to about 400 drachmas to 1 U.S. dollar.

At the turn of the millennium, Greece joined the new attempt to create an international unit of exchange. On Jan. 1, 2002, the Greek drachma was officially replaced as the circulating currency by the euro.

The exchange rate was fixed at 340.750 drachmas to 1 euro. Endit