Bank of Greece Gov.: Greece is the midwife of history for the prevention of crises in the Eurozone

“Greece was a midwife of history for the Eurozone. Without Greece, the euro wouldn’t exist today,” Bank of Greece governor Yannis Stournaras said characteristically from the Economist forum, meaning that the Greek crisis was what created the conditions for effective governance to prevent crises in the euro zone.

Referring to climate change, Mr. Stournaras cited a study according to which we need 1.6 times the Earth to maintain the current standard of living, as the demands are now far greater than the resources the planet offers.

Extreme phenomena

“Extreme weather events have become more frequent and more severe, with increasing losses in capital – human, natural and financial. Consider the devastating fires and floods in Greece during this summer and autumn, which disrupted services and caused significant damage to systems and infrastructure. All of the above lead us to the painful realization of how inextricably linked to nature is our well-being and, ultimately, our survival,” remarked the governor of the Bank of Greece.

Investments

Stournaras expressed his assessment that the relevant investments are still not sufficient and that there are critical challenges that must be addressed at the institutional level in order to mobilize the huge amount of financial resources required. “For example, there is a lack of common methodologies and sufficient transparency in the evaluations of companies’ ESG performance, which does not contribute to the creation of a strong single market for sustainability finance. In addition, the multiple voluntary reporting frameworks of sustainability reports and the absence of companies’ transition plans make it difficult to effectively allocate capital and make sound investment and risk management decisions. Also, the pace and size of funding for climate change adaptation projects remains well below what is needed,” he said indicatively.

Answers to problems

Mr. Stournaras underlined that definitive answers to the problems will not be given without greater and broader fiscal integration, completion of the banking union and the creation of a real union of the capital markets. “However, we should not wait for the political conditions in the euro area to mature for all of this to proceed together. For example, the union of the capital markets is already ripe for immediate implementation, as are the proposals of the European Commission for the management of banking crises and the European deposit guarantee system”, commented the Governor of the Bank of Greece, who recognized that the risks climate-related shocks are a source of volatility and vulnerability for the financial system as they can affect the transmission of monetary policy and create shocks to price stability.