BoG Gov. Stournaras: End of rising interest rates near; confident of forthcoming investment grade rating

The influential Bank of Greece (BoG) governor, Yiannis Stournaras, on Wednesday expressed a view that an ongoing trend entailed in rising interest rates is “nearing its end”, speaking at the annual assembly of the association of Greek insurance companies.

Moreover, in echoing the government’s confidence – and coveted target – over recent months, Stournaras said he believes the Greek economy will soon achieve an investment grade rating.

Such a positive development would boost the incumbent center-right New Democracy (ND) party’s campaign “ammunition” ahead of a May 21 general election, which according to all recent opinion polls will not result in one party garnering enough votes to form a majority government.

“The Greek economy and banks emerged from a major crisis: three memorandums, something that was beneficial,” he said, noting that systemic lenders in the country now retain satisfactory liquidity.

Turning to the main activity of the audience, Stournaras, a former finance minister and commercial bank CEO, said insurance providers in Greece retain assets of 3.8 billion euros, double the requirement of the Solvency II institutional framework.

Regarding insurance policies offered by the private sector, he pointed out that the Covid-19 pandemic, as well as recent natural disasters, highlighted the low level of private insurance held by Greek consumers. He said this “deficit” is only partially due to consumers’ own perceptions of insurance coverage.

“This deficit is basically due to an inability of the state to recognize private insurance as a means of protection against the financial repercussions of personal or business risks; the latter is complementary, not in competition to existing state and social (protection) mechanisms.”