The need to preserve fiscal responsibility “as the apple of our eye,” alongside accelerating investments and reforms, was underlined by the governor of the Bank of Greece Yannis Stournaras, speaking on the Parliament Channel.
In view of the upcoming elections, Mr. Stournaras set political stability as a basic prerequisite for the economy, so that there are governments and a parliament that can make decisions and promote reforms. As he noted, the challenge for Greece is “faster growth with more investments, with more reforms,” while at the same time maintaining fiscal responsibility.
The governor of the BoG also referred extensively to inflation, noting that in Greece the higher performance compared with Europe is linked, in the view of the Bank of Greece, mainly to excess demand. At the same time, he stressed that monetary policy must have as its main priority keeping inflation at 2%, even if interest rate increases affect borrowing.
Regarding public debt, he stressed that the country has made significant progress thanks to upgrades and the reduction in borrowing costs. Indicatively, he mentioned that the reduction of the spread against the German bond by about one percentage point corresponds, on debt of 340 billion euros, to about 3.4 billion euros.
The bet of the next day
Mr. Stournaras placed particular emphasis on the need for further improvement in the functioning of the economy. Among other things, he mentioned financial stability, justice, the reduction of bureaucracy, and improving the relationship of the private sector with education, research, and technology.
At the same time, he noted that the country’s productive model has already changed significantly, as exports have increased and Greek industry has gained a stronger presence in international markets. However, as he stressed, there is still room for improvement, among other things through investments in networks and energy storage, so as to limit fuel imports.
On the demographic front, the governor of the BoG focused on the low household savings rate and the need to develop supplementary retirement systems. He even described the development of occupational funds as an important turning point.
Digital euro and artificial intelligence
Mr. Stournaras also referred to the technological changes transforming the financial system. As he explained, the digital euro will constitute central bank money in electronic form, complementing cash and not replacing it.
At the same time, the Bank of Greece has begun making use of artificial intelligence, while it is examining the applications of technologies such as DLT and tokenization in payment systems and financial transactions.
Referring to cryptocurrencies, the governor of the BoG expressed his strongly negative view, describing them as “tools of speculation,” while noting that central banks can make use of the technology developed around them to strengthen the role of central bank money.
Finally, Mr. Stournaras stressed that Greece has not completed its effort, despite the progress of recent years. “We still have a lot to do,” he noted, underlining that the continuation of reforms and fiscal responsibility is critical in order for the country to achieve a further upgrade of its credit rating.