Nationalization isn't a common word any more. It started to fade out in the 80's when it became clear that capitalist countries were finally pulling away from more left-wing economies.
Nationalization goes back to the whole communist "the workers will control the means of production" thingie. Of course, in practice this meant the government ran the "firms".
This was a fairly common form of communism-lite as practiced by socialists and social democrats around the world. The U.S. even got into the act a few times: Amtrak is our nationalized passenger rail service (don't knock it: it loses money just like the private railways did until they couldn't afford to lose more money on that product).
But Greece doesn't want to nationalize the trains, they want to nationalize banks this time ... and in response to a financial crisis. What's up with that?
First off, Greece is still part of the Eurozone, so the (still) private banks are all working with Euros that can be spent anywhere in the Eurozone.
Secondly, banks are a little different from other firms. Think about the balance sheet of a firm: assets = liabilities + net worth. For most productive firms, the liabilities are paper financial contracts (debt) and the assets are physical stuff. You''d think it was pretty weird if the debt of a productive firm looked like its assets: imagine opening your own pizzeria and going out and borrowing the actual ovens, tables, and a building (and having to make interest payments in the same stuff) ... that would be weird. But that's kind of what banks are like: their liabilities are the deposits of their depositors (basically loans to the bank), and their assets are loans.
So a bank is more like a consignment store (you know, the places that sell your used clothes on your behalf, in exchange for a cut of the proceeds). Except that they're a consignment store for your cash. The big difference is that your used cash is a lot more liquid than your used clothes; in the sense that liquidity is about your ability to rapidly convert your wealth into purchases ... cash is more liquid than just about anything else.
The other detail that's important about Greek banks is that a large and growing part of their assets is those short-term treasury bills that they've been buying to be supportive of the Greek government.
Given all this, here's what the Greek nationalization strategy would look like:
- Introduce a new currency (journalists currently label this "the drachma" because that's the name of the currency Greece had before it joined the Eurozone)
- Nationalize the banks
- Steal all the equity (there may not actually be much equity in the Greek banks to take, so "steal" is a bit harsh)
- Refuse to do any transactions in which money exits the bank (like new loans) in Euros. Instead, require that borrowers accept the new drachmas.
- Accept any transactions in which money enter the bank (like loan payments and deposits) to be in either drachmas or Euros.
- Smile nicely when someone comes in to exchange their Euros for drachmas (while away from the bank you are leaning on every business in the private sector to stop taking Euros).
- Keep all the Euros that the new-ish banks accumulate and use them to pay the interest on the treasury bills, so the Euros end up in the hands of the government.
- Use those Euros to pay off the IMF and other creditors.
Why would the Greek government do this? I think that's easy: 1) because they can, and 2) because they need to.
We could debate a lot about why Greece would "need to" do this thing that other governments don't, but let's just leave it at face value: we already know Greece is in a situation that other countries are not.
Why would the public put up with this? I think that's a good question. First off ... the public almost always puts up with nonsense like this. Everyone wants to believe that the government is doing its best for them. Secondly, I think too few people actually understand how business and finance work. If the axioms that guide your life include 1) rich people exploit poor people, 2) it's always someone else's fault, and 3) you don't readily distinguish revenue and profit ... then concluding that you're not responsible when you take the big pile of cash because it belongs to some faceless rich guy makes a lot of sense.