Fireside chat at the Delphi Economic Forum XI with the Bank of Greece Governor Yannis Stournaras and Christian Schubert, Economic and Business Correspondent, Frankfurter Allgemeine Zeitung (FAZ)
22/04/2026 - Articles & Interviews
CH. SCHUBERT:, Ηello, ladies and gentlemen. Thank you very much for being here. Just briefly, my name is Christian Schubert. I'm a journalist with Frankfurter Allgemeine Zeitung. But much more importantly, our guest this afternoon, who is one of those who, when they say they don't need much introduction but still some words, Mr. Yannis Stounaras, Governor of the Bank of Greece. Thank you very much for being here.
You have been in, in finance for a long time. You have been crucial at the time when Greece entered the Euro. You have been running a bank in the private sector. You were finance minister, and, since 12 years, if I'm not wrong, you are a member of the ECB Council, and you are the longest-serving member except one, I think the Governor of the Bank of Luxembourg, right? Who has been a longer-serving member, but I'm sure…
Y. STOURNARAS: Gaston Reinesch.
CH. SCHUBERT: I'm sure you will overtake him at some point as well.
Y. STOURNARAS: You never know.
CH. SCHUBERT: I think you're very much a man who acts in a long-term horizon. And I was digging a little bit, and I found a paper, an economic paper with the interesting title "Are Oil Price Movements Perverse?" And that paper is from 1985. And do you know who wrote that paper, Governor?
Y. STOURNARAS: Yes, I know. Myself.
CH. SCHUBERT: Because it was you. Exactly.
Y. STOURNARAS: It’s the early years of my career in Oxford.
CH. SCHUBERT: Exactly. That is very much, I guess, a topic of these days. Many people who fill up their tanks these days probably say oil price movements are actually perverse. And, that gets me to my first question, Governor Stounaras, how should the European monetary policy deal with the latest energy price shock, and how should the ECB avoid a scenario like in 2022 when inflation shot up to above 10%?
Y. STOURNARAS: Well, thank you. Thank you very much for the invitation. I'm so glad to be here again. There is a lot of uncertainty worldwide now. There are geopolitical conflicts, in many places of the world, that create supply-side shocks, serious supply-side shocks, energy crisis once more.
But it seems that markets are optimistic and resilient that this war will soon end. I'm not sure. I think political analysts are not so optimistic as markets are. But for the moment, we are very close to our baseline scenario, ECB's baseline scenario. Let's say between the baseline and the adverse scenario. So, given the uncertainty and the high hopes that this war might end soon, we’ll review the data next week when we meet in Frankfurt. My view is that we should wait. We are very experienced from the previous crises. So if needed, we'll act immediately. But for the moment, all the estimates we have is that inflation, for the moment, I repeat that, could be less than in our baseline scenario this year, given current circumstances and if the war ends soon.
So, I think we should give an opportunity to the negotiators, so the war will not continue, and the situation will normalize soon. But if this is not the case and it continues, then you should have no doubt that we'll do what is necessary as we did it before. And don't forget that we achieved a soft landing, that is, we came back to our target of 2% without recession, without financial stability problems. And, if needed, we'll act again.
CH. SCHUBERT: But didn't we, if I may go back briefly to 2022, didn't we all pay a very high price because of this high inflation? And you are known as somebody who is in the camp of the doves, right? Not the hawks, but the doves. And you stick to that. And, if I recall correctly, even in February 2022, when inflation was above 5%, I recall, you were still pleading against interest rate hikes. So were you and your supporters too dovish at the time?
Y. STOURNARAS: As you know, when there is a supply-side [inflationary] shock, in theory, monetary policy should look through it, shouldn't do anything, shouldn't raise interest rates or reduce interest rates if it's the opposite. Monetary policy should act only if we have secondary effects, for instance, if expectations are affected or if wages go up. So the doves, as you said, according to the theory, wanted to wait, as we did. And I think we've done the right thing because if we had acted in the way that other people wanted, now perhaps we would have less inflation, not much less than the inflation we had, but also a serious recession and perhaps financial stability problems. So, looking back and with the benefit of hindsight, I think that we were right, not wrong.
CH. SCHUBERT: The question is a little bit what is worse, right? Inflation or low growth?
Y. STOURNARAS: Of course, there's a dilemma. It's a supply-side shock. And that was very complicated because there were also many events coming from COVID, fiscal expansion. So it was a complicated situation. But as I said, we achieved soft landing. This waiting perhaps gave some time to the economy to recover. So, we avoided the worse. We avoided the recession, and we've avoided financial stability problems, new NPLs for banks. That's why we said that we have achieved soft landing.
But I think the criterion and the most important thing was that the ECB was independent. We decided, in the Governing Council, we discussed the situation. We saw the data. And we understood that the future markets, the oil future markets, were wrong. They were very optimistic. If you remember, we said, “Okay, we don't need to make a prediction/projection about the future oil prices because we have the future markets.” The future markets led us astray in this way. But now we are wiser. We have scenarios and more experience. But I did not regret that we did not increase interest rates earlier at that time.
CH. SCHUBERT: So, this time, you also plead for remaining relaxed, waiting to see.
Y. STOURNARAS: For the moment, yes. I think we should give some time for peace to be achieved.
CH. SCHUBERT: But the situation at the Strait of Hormuz will be probably not very clear for a long time, don't you fear this scenario?
Y. STOURNARAS: But if there is a truce, if there's an agreement, then the situation will improve quickly, I think. And already markets are even more optimistic that we are in our baseline scenario. So, markets see through, perhaps, and there are, I would say, very rational things to expect. Neither the Americans nor the Iranians want this war to continue. The Americans have elections very soon, the midterm elections. Iran is almost destroyed, so, it doesn't make any sense to continue this war. And that's why I belong to the optimists, that this war will end sooner rather than later.
CH. SCHUBERT: I mean, often they say it's easier to start a war than to end a war, right?
Y. STOURNARAS: Yes, this is true. But don't forget that this was not a war of necessity for the United States. It was a choice.
CH. SCHUBERT: You mentioned independence, independence of Central Banks, which is a cornerstone of our system.
Y. STOURNARAS: Yes.
CH. SCHUBERT: In the US, we see the system being eroded, by a president who is completely erratic, completely unpredictable. That must be quite a horror scenario for a central banker, isn't it?
Y. STOURNARAS: It is, actually, because we have experience now. We are very experienced from the oil price crisis in the '70s that President Nixon tried to keep interest rates low. And so, the opposite happened. I mean, inflation shot up and interest rates also shot up. So, we have learned the lesson that independence of the Central Bank is the best nominal anchor you can have. And we follow this.
This is one of the best things that happened in Europe, that we have now an independent Central Bank. We have a Eurosystem. In my view, this is an example that can be mimicked. It's a most federal and successful example in Europe that other sectors could also follow, I think. That we have a bottom-up approach, working together with committees all over Europe, all over the Eurozone, and then that goes up to the Governing Council, and we decide based on data, and nobody dares to pick up the telephone and tell either the President or any other member of the Governing Council that you should do that and that. This is out of the question. This is inconceivable. And that's why the ECB might not be the most flexible Central Bank in the world, because we have so many safeguards, but definitely we are the most independent Central Bank of the world, I think.
CH. SCHUBERT: But will this remain this way?
Y. STOURNARAS: Oh, yes, it will remain.
CH. SCHUBERT: Because we have political developments that nobody can exclude that it goes in the direction of the United States. And we have political forces in Europe, definitely, who don't judge very highly the independence of Central Banks. Doesn't that worry you?
Y. STOURNARAS: Now, if you look at the Eurobarometer, you will see 82% of Europeans, they support the euro. Actually, they support the monetary policy of the ECB. So, they know very well, politicians know very well that behind this confidence is the ECB, is the Eurosystem with its independence and its experience now. So, I don't think that, given the political civilization of Europe, anybody will dare to cancel the independence of the Central Bank, which in my view is perhaps the highest achievement in economic policy in Europe.
CH. SCHUBERT: You don't think the ECB should do more to convince also the broader public and the decision makers about the importance of the independence of Central Banks?
Y. STOURNARAS: Yes. We should do more. Definitely. We should do more, not only the ECB, but also the National Central Banks to convince our public.
First of all, there's financial literacy problems. Many citizens think that Central Banks are very much like other commercial banks. Many people don't understand the difference between a commercial bank and a central bank. We are here for the public good. Monetary policy is a public good policy. We don't maximize profits.
Don't forget that some people now are criticizing many National Central Banks and the ECB itself that, in the last several years, they have recorded losses. But this is the result of the monetary policy we follow. And it does not matter that we have losses. We don't maximize profits. I mean, if we wanted to maximize profits, very easily I can show you one equation that if we raise inflation, we'll raise profits. But this is not the issue. The issue is how to bring inflation back to the target without a recession and without financial stability problems.
And believe me, the ECB, despite the fact that Europe is fragmented, despite the fact that we don't have a banking union, despite the fact that we don't have a capital markets union, despite the fact that there are differences between north and south, center and the periphery, the ECB has done very well.
CH. SCHUBERT: But the ECB is maybe a little bit alone. How can we make sure that Europe is not in the future, kind of the punching ball of the superpowers, United States, China? Definitely, one important element, we have to become more competitive. You mentioned the banking union and capital markets union. Let me ask you one precise question. Interesting, the case of Commerzbank and UniCredit in Italy. UniCredit cooperates quite well with Alpha Bank in Greece, I understand. No problems.
Y. STOURNARAS: Very well, yes.
CH. SCHUBERT: How do you see the German government's position, the resistance against a takeover of Commerzbank through UniCredit?
Y. STOURNARAS: I will start from your first question. I think Europe is an oasis and a paradise of democracy, and it should remain this way. Okay, we might be critical of Europe, that we have not yet achieved a complete banking union, a capital markets union, that we are segmented, that there are so many differences in European capitals. But don't forget we rank high, according to all the metrics of democracy, and there are metrics. I think the Economist, a few days ago, published a list of democratic countries, of the very democratic countries, of the mediocre democratic countries, of dictatorships. Europe looms large. It's a strong democracy. It should remain. It's a rule of law, I think.
CH. SCHUBERT: Well, many people question the benefits of democracy these days, also in Europe, right?
Y. STOURNARAS: I should offer them to read history then, if they question the benefits of democracy. They should read history. What we have to do to strengthen Europe even more is to come closer together. I will use a word that many colleagues might not like, but they are coming closer to me to become more federal. Now, we need more Europe, not less Europe. We need to have at last a pure banking union with a European deposit insurance scheme. We have made some progress in recent days, in this direction. We need a capital markets union. And do you know why? Because we save much more than America. We have a current account surplus, but this surplus is channelled outside Europe. Do you know why? If you ask the most important wealth managers, they will tell you two things: First of all, and this is more important, because we don't have a common European safe asset. And second, because…
CH. SCHUBERT: It would be the Eurobond, right?
Y. STOURNARAS: It could be Eurobond. I can tell you, in a realistic way, like the way we had the NGEU, the RRF, the Resilience and Recovery Fund of 850 billion, borrowed by Europe. It was a success, a very successful scheme, during COVID, and believe me, it was because of the Greek crisis. Greece acted as a midwife of history. It showed the way.
CH. SCHUBERT: But there are big doubts whether this money has been spent well.
Y. STOURNARAS: It has been spent well. I can tell you from the European South.
CH. SCHUBERT: For example, in Italy, there's a big debate whether this money has been spent well. That's why a lot of resistance comes to the question. A lot of people are against repeating that scheme, right?
Y. STOURNARAS: Look at the big picture. We see convergence now between South and North, between the center and the periphery. And it's not because Germany is laggard, no. It's because the South is doing well. For the first time in many years, the South is growing faster than the center, than the North. And, this is very good.
CH. SCHUBERT: Sorry, because we run out of time. You have to say some words about Greece, please. So the situation about Greece, briefly. Economically, we know it's not going that badly. But what about politically? We have the scandal about the farm subsidies. Is there still political stability in Greece?
Y. STOURNARAS: Let justice decide whether it's a scandal or not, because I was involved in a so-called scandal, if you remember, the Novartis scandal, and turned out to be a scandal of the other side. So, let's wait. And don't also forget that, this scandal, in quotation marks, has been discovered by the Greek government.
So, it means that institutions work. Europe, I'm not saying, has many problems in the allocation of the agricultural funds, it's true. But it does not reduce the success of Greece in recent years. Don't forget where we were 15 years ago, 10 years ago. 80% of journalists, 80% of analysts, 80% of many politicians would say that Greece will not make it in the Euro. Not only it made it, but now it's growing twice as much as the rest of Europe, with public debt falling continuously as a percent of GDP. With real wages rising not very quickly, but according to productivity growth. With investment rising with the help of the RRF, now it's almost 18% of GDP. Six years ago, it was 11% of GDP. So, Greece is going very well if you take into account where we were in 2015 and 2010.
CH. SCHUBERT: Thank you for those optimistic words. We still have a couple of seconds. One thing, that is also asked by a lot of young people, is the digital Euro. Why does it take so long until it arrives?
Y. STOURNARAS: Not because of us. I mean, we are fully prepared in the ECB. There was a debate in the parliament. I think now the situation has improved a lot. There is an agreement, an initial agreement. It's necessary because the digital Euro will, first of all, be voluntary. It does not mean that we are going to eliminate cash. But now many young people are using the mobile phone. So, we need, also, to enter into the digital Euro era. And, we want also to adopt many technologies for the tokenization of Central Bank money, and the digital Euro will also help that.
So, digital Euro for the retail market, but also the digital Euro for the wholesale market. I think it's a necessity because otherwise we run the risk not only of lagging behind the digital era, but letting out Central Bank money. And that means to come back in the 18th century or the 19th century, 1835 in the United States, with a big crisis, because any bank was creating its own money. We don't want that. We don't want to privatize monetary policy.
CH. SCHUBERT: Governor Stounaras, thank you very much.
Y. STOURNARAS: Thank you.