As Greece'sfinancial plight worsens, an odd idea keeps popping up: aparallel currency alongside the euro that would circulate insideGreece and be used to pay for anything from taxes to food andclothing. Even German Finance Minister Wolfgang Schaeuble has saidthat Greece may need a parallel currency if talks with creditorsfail, people familiar with his views told Bloomberg.

One version of the idea calls the second currency a TAN, for taxanticipation note. Another calls it a grec, for governmentreimbursement exchange credit. There's also the TCC, for tax creditcertificate. In 2014, before becoming Greece's finance minister,Yanis Varoufakis pitched European governments on the FT-coin, where“FT” stands for “future taxes” and “coin” refers to “bitcoin.”

Details differ quite a bit, but the big idea is to free up eurosto pay foreign debts and to juice economic growth by spreading moremoney around domestically. The money would be an IOU issuedby the Greek government that could be passed from one personto another. The government could print a bunch of the newcurrency (or create electronic ledger entries if the currency isvirtual) and spend it on whatever governments buy, including civilservants' salaries. People would in theory be willing toaccept the money because it could be used to paytaxes.

Greece doesn't have the option of monetary stimulus,because Greecedoesn't control its own money—the European Central Bank does.And it can't run bigger deficits because creditorswon't stand for it.

But is this idea anything more than an intellectual exercise?Unfortunately for Greece, probably not.

“No, it's not a good idea, and no, it has no chance ofhappening,” said Jacob Funk Kierkegaard, a senior fellow at thePeterson Institute for International Economics. Introducing it, hesaid, “would surely aggravate the other Europeans as well asthe ECB. It would politically aggravate the situation that Greeceis in.” He called it “very primitive and naive, knee-jerkKeynesianism.”

People would naturally be suspicious that the new currency wouldbe funny money, and wouldn't accept it on the same terms as euros,Kierkegaard said. Given Greece's track record, they would tend tofear that the government would print too much of it, creating anoversupply that would degrade the currency's value. Andbecause the initial allotment would produce a smaller economicspurt than the government was counting on, the government wouldindeed be tempted to print more, Kierkegaard said.

In February, Huw Pill and Themistoklis Fiotakis of Goldman SachsInternational described the idea of a parallel currency asbelonging to a “gray area” between fully staying in the Eurozoneand completely exiting.

Backers of parallel-currency concepts say the idea can work.“The grec is emphatically not 'funny money.' It has a real,tangible value from day one,” Alan Harvey, senior economist at theInstitute for Dynamic Economic Analysis (IDEA) in Seattle, wrote ina paper. It's the ability to use the government-createdalternative currency to pay taxes that guarantees its value, Harveysaid in an interview. Ordinarily money is created through banklending. “This is a different way of creating money,” he said.

Parallel currencies are sometimes found in countries that imposecontrols on the inflow and outflow of money. Cuba has had anon-convertible peso alongside a convertible CUC, although it'sphasing out the latter. Another twist is a local currency likeIthaca Hours, which is used to buy goods and services in the areaof Ithaca, N.Y.

But even enthusiasts acknowledge problems. RobertParenteau, who along with Trond Andresen has written about the TANas an electronic parallel currency, said he pitched the Greeks onthe concept with the assistance of University of Texas economistJamie Galbraith, who has worked closely with Varoufakis. He hasn'theard back, and now time is running out on the government, hesaid.

“These are academics who are trying to be policymakers,” saidParenteau, sole proprietor of MacroStrategy Edge, aninvestment and economic consultancy in Berkeley, Calif. Co-authorAndresen is at the Norwegian University of Science andTechnology.

All is not lost, though, Parenteau said: “Maybe the ideawill take root in Spain or Italy.”

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