Greece's economy, already burdened by national debt, suffered acute problems as a result of intense military operations (from 1912) and the consequences of these especially on the economy of the newly-annexed northern provinces; the National Schism and related conflicts; the participation of Greece in the First World War;

and, lastly, allied operations in Macedonia.

In order for the Greek state to meet its reparations, the Allies (Great Britain, France, America) granted credits. These monies could be disbursed only after the end of the war. On the basis of these credits banknotes were issued. After the end of the war, however, these credits were not used in their entirety: only half of the British and one third of the American notes were used by the end of 1920.

With the political changes of that year and the rise to power of the United Opposition and King Constantine, the influx of monies from the Great Powers practically ceased and Greece pursued the Asia Minor Campaign using its own resources. This development resulted in the rapid deterioration of the economy, rampant inflation and the fall in value of the drachma.