Difficult to say, but assuming the rest of the Euro doesn't also collapse, here are a few possibilities as outlined by the Telegraph:
- Every bank in Greece will instantly go insolvent
- The Greek government will nationalise every bank in Greece
- The Greek government will forbid withdrawals from Greek banks
- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law
- Greece will re-denominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting on 50 per cent or more of all Greek euro-denominated debts.
Chances are the government will choose to default on a Friday after the markets close. Only a few key people in the government, plus maybe the leaders of the opposition parties will be aware of this, in order to stem large scale panic and a run on the banks. Nevertheless rumours will still get out and at this point people will try to get their money out of the banks. Cash will be King because savers will desperately want to get their money out whilst it is still in Euros.
On the Monday morning, the new Drachma will come into effect. Initially it will be launch on parity with the Euro – 1:1. However within hours it will devalue and so anyone who hasn’t managed to get their saving out in Euro beforehand will immediately see their savings devalue. This will spark civil unrest and so the army will need to be called in to protect banks and the parliament.
Even those people that manage to get their Euros out may find some odd situations occurring. In theory a Greek Euro is worth the same as a Spanish Euro or a France Euro or a Germany Euro. There will still be Greek Euros in circulation all over Europe for some time. However shop keepers may start to refuse to accept the old Greek Euro and instead only accept say Germany Euros.
However, there is some hope. When Argentina defaulted and end their peg with the US Dollar, the economic collapse lasted roughly six months. While it was indeed a painful period, the economic recovery started rapidly; nine months after default and devaluation, GDP began growing rapidly. And it is a trend that continues even today.