The servicing of the foreign debt (public and private) absorbed in 1932 81,08% of Greek exchange returns. This was the reason why the Greek government had appealed to the League of Nations and had solicited to the International Financial Commission in Greece for a five-year suspension of the loan's sinking funds in foreign currency and the contracting of a new loan of 50,000,000 dollars. However, the Council of the League of Nations in the meeting of April 11, 1932 decided to suspend the payment of sinking funds for only one year and referred Greece to a direct conversation with the bondholders. In its effort to suspend the payment of sinking funds, the Greek government decreed that the payment of coupons should diminish by 25% from April 1, 1932. Then it declared a temporary moratorium of debts from May 1, 1932 for foreign loan interests too. In this way the bankruptcy was made official, while the minister of finance Georgios Maris had resigned on April 21.

The Venizelos government with its new minister of Finance, professor Kyriakos Varvaressos proceeded to the raise of stabilisation. On April 25, 1932 a bill had been introduced to the Parliament concerning the "suspension of the responsibility of the Bank of Greece to cash its banknotes and the regulation of foreign exchange buying and selling. The Parliament and Senate passed the bill, which became law 5422 of April 26, 1932, through which the drachma reverted to obligatory circulation and free buying of exchange was being prohibited. Among others, Varvaressos declared in his speech: "I must confess that today I am in an extremely unpleasant position, as I am introducing to you the abandonment ... of the gold-exchange standard. As the president of the Government has implied, this is not a measure that derives from the government's free judgement ... but one enforced by an inescapable state of emergency".