“I have respect for Merkel, because she ultimately helped save Greece”
The governor of the Bank of Greece Giannis Stournaras spoke on SKAI radio about the Samaras – Venizelos co-government, about the scenarios that present him as the next President of the Republic, about Merkel’s role, while he “attacked” Alexis Tsipras for the 2015 negotiation.
Mr. Stournaras initially stressed: “I have respect for Merkel, because she ultimately contributed to saving Greece and things are judged by the result, but the spring of 2014 was the last time the International Monetary Fund disbursed a tranche” and added:
“Very good things were done during Samara’s prime ministership, now history will write the rest. Greece really escaped by a hair, Merkel ultimately played a very important role in saving Greece, so I look at her with respect, but it doesn’t mean that everything she says is right.” In fact, referring to the background of the so-called “time out” proposed by the then German Finance Minister Wolfgang Schäuble, he revealed that “if Greece were to leave the euro then, it would become Syria”.
The third memorandum
In response to a question about whether it was a “foul” of the lenders that in 2014 they did not give the “green light” to exit the memorandum, despite the fact that Greece had made all the necessary moves, and were waiting for Alexis Tsipras, Mr. Stournaras agreed, characterizing this move as the “biggest foul”, since the condition that had been set in our country by the Eurogroup was when we catch a primary surplus, then there would be a “restructuring” of debt, a reduction in interest rates.
“Then Germany had European elections and they didn’t want to do it, so we tried to find every excuse. The second justification was that if we did it now, this government falls and another more unruly one comes, we will have no more weapons in our hands. But in the end, because everything is judged by the result, if we had done it then, maybe there would have been no need for the third memorandum, which was perhaps the toughest of all” the governor of the Bank of Greece underlined.
Responding to former Prime Minister Alexis Tsipras’ claim that his negotiation did not cost 100 billion, Mr. Stournaras referred to the Public Debt Sustainability Analysis by the IMF at the end of 2014 and this one at the end of the first half of 2015. “I lived this, no one can tell me that it is not so, I lived it on my back. Very few know what we went through then, so it’s only natural that I feel a sensitivity about these matters. But I know that, in the end, the end is good, everything is fine and we are reaching the point of being a model for both Germany and France”.
At the same time, in terms of the scenarios that present him as the next President of the Republic, he was categorical: “The country has a President, who is very good, in my view, if you want my opinion, as far as I can think of, and the country has a central banker who likes the job he does.”
He also noted that “we are afraid of the Trump presidency” because, as he explained, “If Trump does what he said on the campaign trail, that he’s going to put tariffs on, he’s going to cut corporate taxes in America, he’s going to deport immigrants, well, that’s an explosive mix, and he’s getting into a situation where right now the debt of the United States is going rapidly increasing. Many say that it doesn’t matter, because the dollar is behind, but they forget that the dollar is the basis of the system, because it is precisely based on a safe asset that is the bonds and interest-bearing notes of the US Treasury, if they weaken , will weaken the dollar in the long term, that is. Europe should appoint someone who will negotiate. A war is always a very unpleasant development, of course, because there is a loss of life, but also in the economy, that is, Europe entered a crisis because of the war in Ukraine.”
In the fall, the key interest rate of the ECB will be at 2%
He reiterated that the European Central Bank’s key interest rate will fall to 2% (ECT) in the fall, from 3% which is today, Mr. Stournaras.
It is recalled that from the stage of the Bloomberg conference last November (11/18) he had predicted that the key interest rate would decline by the end of 2025.
Speaking on SKAI radio, the commander of the Ministry of Defense said that “we have made four reductions in the European Central Bank, we have dropped from 4% which was in June to 3%, this is the base interest rate. The banks pass it on to interest rates, they are obliged to, and the Bank of Greece monitors exactly this reduction, because interest rates are variable, so the reduction is mandatory. And I also expect another 100 basis points of reduction, to be close to 2% by the fall of 2025. The borrower will immediately see that.”
On the issue of banks and supplies, Mr. Stournaras noted that “the commissions that banks get are not only commissions from money transfers, from ATM withdrawals related to the measures, they are also commissions from investment banking, from portfolio management so you cannot interfere with them, these are fees that they do for jobs that they do. So believe me the measures are correct, measured and priced. Maybe the banks have also fallen a bit victim to their own rhetoric that everything is going perfectly, that they have very big profits.”
He also noted that “they only have profits recently. Of course, they must make profits and to a very large extent their profits are the result of the monetary policy we follow at the European Central Bank. Don’t forget that in previous years they also had big losses.”
“Half of the capital of the banks, precisely because of the haircut of the bonds, because of the red loans, is not paid-up capital yet, it is a claim against the Greek public that they have, this is called deferred taxation. They pay but are offset against the obligation that the public has towards them. So now we want the profits that make up a part of these profits, they must definitely go to dividends because people invested in the Greek banks. The Financial Stability Fund sold shares, we cannot tell the shareholders that you will never get a dividend. So a piece will go to a dividend. A portion of course goes to amortization of deferred tax and one goes to capital appreciation. So they must achieve all three of these together.”
