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The head economist of Eurobank EFG: Our bank in Bulgaria is stable

09 March 2010 / 15:03:22  GRReporter
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    - As you know at the European council the firmer point of view took over the softer one. This means to leave Greece to handle its problem alone because in this way the others are also thought a lesson. Because Greece is not the threat to the euro zone. The threat will come if a much bigger country - whether it is called Spain, whether it is Italy or whichever other country, is left with such big deficit and in this way drags the rest of the countries. However the stricter core got the upper hand. The opinion of the European central bank was also firm as it wants to grant itself independence. It does not want to promise that if anywhere a problem is created it has to provide liquidity. Of course this year the European central bank has no problems. It could have provided liquidity because the inflation is also low and it would have stabilized the common European currency. The Greeks on the other side also didn’t say come and save us. If they had done that it would have sounded as if they admit their intentions to decrease the deficit are not serious. They had to say: “We will do our job”. Then the European Union came out and said: “Well in this case if anything happens we will interfere and save you”. What happened at the European council is the point of equilibrium of the ambitions of all players. And this is not a bad thing in the sense that Europe sent a message that it could help and that a mechanism will be created so that in case of a crisis something will be done, however this won’t happen right now. The markets have no patience. They have to see right now that the European Union is providing some capital. The Europeans however are not in a rush to react. The reaching of a consensus takes time. If you ask the bureaucrats in Brussels what happened at the European council for them is a revolution. The fact that it reached to a consensus about “no bailout” to them is a revolution. The euro zone was lucky that the crisis hit a small country and not a big one and now it has to start thinking in a more creative way how to make a mechanism parallel to the common monetary policy so that the currency union to be lasting and not to be what many people hope it will be – temporary. Because many economists are looking back at the history of economy and are saying that never a currency union has functioned without having a political union. Currently we have here a currency union without necessarily having a political union only by imposing very strict criteria for membership. Well, these criteria have to be reconsidered a little bit better.

    - Why all of a sudden Greece turned out to be in the center of such a serious economic crisis?

    - Since the beginning of December everybody started talking about the Greek economy. At that time the three credit rating agencies decreased the credit ratings of Greece. Many newspapers, mostly foreign ones when they saw that Greece has a big deficit and enormous public debt, as there is no debt in the private sector, decided that Greece is the weakest unit in the European Union and it will drag the entire euro zone down. The old critics of the euro zone raised their heads, the ones who never believed that it will be created and that very soon it will start falling apart and they saw in the Greek crisis the beginning of the end of the euro zone. They saw in Greece the crack of the mirror which will break it all, rather than the breaking of a bone which will soon heal. In this way Greece entered in the radar of the markets and when you do that it is difficult to get out. You have to take quick decisions and to anticipate the markets rather than to follow them. Well it took a while for the politicians to figure this out. Now they did and they understood how the markets work and they will soon influence them. I mean they will present a package of measures which will convince them that Greece will decrease its deficit.

    - Every day we are witnessing strikes in Greece. Do you believe that the Greek society is mature enough to support the painful reforms?

Tags: Eurobank EFG Gikas Hardouvelis economic crisis
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