Yannis Stournaras, Governor of Bank of Greece, argues that the pandemic shock has incurred significant costs but has also had benefits for the Greek economy.
At the EU level, he argues the Recovery and Resilience Facility is the first, albeit small, step towards a more federal fiscal policy in Europe and asks for further initiatives towards political integration for the EU not to stay behind.
In an exclusive interview to Antonis Papagiannidis and Alexandra Vovolini, the Governor of Bank of Greece talks about the possible benefits from the pandemic:
“European authorities had realized early on that we needed common action. That without common action, Member States which are vulnerable in their public finances would have faced a very grave risk. So we, at the ECB, decided immediately after the eruption of the pandemic to have a monetary policy that is not only accommodative, but also flexible and inclusive – for instance Greek Government bonds are now eligible for the Pandemic Emergency Purchase Programme of the ECB (PEPP), despite the fact that these bonds do not have investment grade status yet. Also, the Eurogroup decided to suspend the application of the Stability and Growth Pact (SGP)… The pandemic worked as a catalyst, as a wake-up call. Practically, the first step has been taken with the NGEU; to me, the next step will be a full Banking Union.”
Yannis Stournaras also talks about the mutualization of debt in Europe, the preconditions for a European fiscal and political union and the opportunities arising from the from the Recovery and Resilience Facility, as “Greece is the biggest beneficiary –in per capita or in GDP terms– along with two or three other EU Member States”.
You can read the full interview in the January/February 2021 issue of Greek Business File, available here