In an article in Sunday’s Kathimerini, Bank of Greece Governor Yannis Stournaras underlined the importance of Greece’s Parliament approving measures agreed with creditors for the third bailout, including reforms to the pension and tax systems, and warned of the risks of a new period of “backsliding.”
Failing to successfully complete a review by creditors in the coming weeks could trigger a new bout of instability that Greece is unlikely to survive, according to the central bank governor who served as finance minister from July 2012 to June 2014. “A potential failure to complete the review would have a destabilizing effect, bringing back to mind the negative experience of the first half of 2015,” he wrote, referring to a period of high tensions and political and financial uncertainty.
Of all the bank savings withdrawn since 2009, a total of 40 percent was taken out in the first half of 2015, Stournaras wrote. “A new period of backsliding today is out of the question,” he said.
Alternatively, satisfying the creditors in the forthcoming assessment could start turning things around for Greece, Stournaras wrote. “It is the key for the return of deposits to the Greek banking system and for the launch of discussions with partners on a series of positive actions,” he wrote, listing the further lightening of debt, the acceptance of Greek bonds as collateral for cheaper financing from the European Central Bank and the gradual lifting of capital controls on Greek banks.