Central bank governor Stournaras optimistic about future of Greek economy

Bank of Greece (BoG) Governor Yannis Stournaras expressed optimism over the future of the Greek economy on Friday, saying that earlier risks have been removed.

Addressing a special ceremony at the University of Crete at Rethymno to celebrate the bank's 90th anniversary, Stournaras said, "Difficulties are behind us, and the risks that existed previously for Greece and the economy are gone." He added, "I am optimistic about the future of the Greek economy, despite the fact that the crisis has left a heavy imprint reflected in the high public debt and high non-performing loans that need special handling to be reduced."

Stournaras was presented with a gold medal by the University of Crete at Rethymno in recognition of the bank's contribution in economic and social science research.

The BoG governor noted that the crisis has also left in its wake a high unemployment, despite the fact that the rate has dropped and the country is moving with positive growth rates. "The crisis cost our country a 25 pct decline in the GDP, with consequences on the level of prosperity of people. We have learned our lessons, but we must never return to the policies that brought us to his point," he added.

The central banker stressed that national general elections on July 7 cannot affect the economy since "it seems that we are entering more stable conditions," and stressed that fiscal policy should be disciplined in Greece, "as member of a system of countries sharing a common currency."

"To be a member you must follow the rules of the single currency, and this is one of the reasons why Greece suffered so heavily - because for a long period we did not follow these rules. This is a lesson we must never forget and we must not go back to such policies," Stournaras said.

He also participated in a round-table discussion on Friday afternoon that reviewed monetary policy during the recent financial crisis. Participants included officials of the central banks of Switzerland and Romania and professor Charles Wyplosz of the Graduate Institute of International and Development Studies in Geneva.

Among other comments, he said that Europe needs to set up a European fund guaranteeing bank deposits and praised the role of the European Central Bank (ECB) in the current crisis, especially with its purchase of bonds that are now worth over 3.5 trillion euros, corresponding to one-third of the EU's GDP.

The central bank governor said the numismatic policy would not prove adequate forever on its own, in stabilising the European economy, therefore it was necessary for every country that had the financial margins to do so, to introduce financial policies to support it