Bank of Greece Governor Yannis Stournaras interview to Politico and Johanna Treeck
19/02/2026 - Articles & Interviews
Yannis Stournaras was campaigning for eurobonds long before it was trendy.
But now the Bank of Greece Governor is setting his sights on his toughest audience yet: The German government.
In an interview with POLITICO, Stournaras said the arguments are on his side. Back-to-back crises have left heavy debt burdens on the shoulders of EU governments, limiting the power of the public purse to tackle challenges posed by U.S. trade tariffs, Russia’s war in Ukraine and Chinese threats to limit exports of critical raw materials
Without common bonds to fund defense, the green transition and strategic investments, the EU’s economy will fail to compete on the global stage. What’s more, Stournaras has the German and Dutch central banks on his side after the European Central Bank ended a 15-year internal feud over the need for “a common European, highly liquid, euro-wide benchmark safe asset” — in short, eurobonds.
The ECB’s Governing Council of central bankers issued their rallying call to EU leaders during an informal summit earlier this month. It’s time governments got on board too, according to Stournaras.
“The present international environment has been a wake-up call to European policymakers,” the 69-year-old said. “The resulting political momentum is certainly promising.”
His optimism contrasts with continued opposition from German Chancellor Friedrich Merz, who rejected the idea outright at an EU summit last week.
“I do worry,” Stournaras said about continued pushback from Berlin. “But I’d like to convince them.”
Stournaras, who served as Greek finance minister from 2012 to 2014 before moving to the central bank, certainly has a lot of practice in such advocacy. He had long found himself isolated, along with his Italian colleague, on the Governing Council. During the height of the sovereign debt crisis, their position was often ascribed to national interest, as their countries stood to benefit disproportionately from shared borrowing.
“Some years ago, we were one, maximum two Governing Council members arguing in favor of eurobonds,” Stournaras recalled. “The rest of us thought, ‘You are coming from the European South, so it’s understandable.’ But now we have all realized how important it is.” Now, even Germany’s Bundesbank, the de facto leader of the skeptics, has turned.
As Stournaras sees it, the fact that southern EU countries that were teetering on the brink of bankruptcy a decade ago are now performing well has helped to shift views. Certainly, the subsidy from Berlin to other capitals that is implicit in joint borrowing has shrunk sharply. The infamous “spreads,” which represent how much more Greece and Italy had to pay than Germany to borrow for 10 years, now stand at less than 1 percentage point.
Investor appetite
The most powerful argument, however, is a clear message from investors that all of Europe will benefit from joint debt, Stournaras argued.
“If you talk to any important wealth manager, either in Europe or in the United States, and ask her why most of the current account surplus we have in Europe is flowing abroad, she will tell you that the lack of sufficient safe assets is the critical issue,” he said. “It is even more important than the rate of return.”
Joint issuance should serve “well-defined common European purposes,” Stournaras said. “You have three common needs in Europe that can be funded commonly. Defense, green transition, innovation.”
Advocates of joint borrowing argue that a more liquid market for safe euro assets will enhance the region’s relative attractiveness for global capital, at a time when the reliability and desirability of dollar assets are coming under increasing scrutiny. Competing with the dollar for global reserve currency status could ultimately — if only gradually — lower the cost of borrowing and investing for governments, companies and households.
The Greek declined to say how much new debt, exactly, would be needed to make a real change to financial conditions in Europe, but said there needs to be meaningful amounts of both short- and long-term issuance. Short-term debt serves largely as a place for investors to ‘park’ money temporarily, while long-term debt typically provides a benchmark price for private-sector projects with long pay-off periods, such as infrastructure.
Moral hazard
Stournaras stressed that eurobonds “cannot become a substitute for sound national fiscal frameworks.” But he argued that new rules or oversight bodies are also unnecessary.
The central banker pointed to past experience — specifically the €800 billion post-pandemic recovery fund — as a successful precedent. “Crucially, [recovery fund] financing was linked to clearly-defined European objectives, time-bound commitments and reform conditionality. This architecture helped alleviate moral hazard, while enhancing credibility in markets,” he said.
Critics would argue that moral hazard wasn’t completely removed. Under Prime Minister Giuseppe Conte, Italy, in particular, helped to finance its budget-busting “Superbonus” tax credit with NGEU money, forcing Conte’s successor Giorgia Meloni into drastic corrective action in recent years.
The debate over Europe’s financial architecture is proving more exciting this year than the near-term monetary policy outlook. Stournaras said that “the euro area economy remains in a good place” with inflation projected to converge to the ECB’s 2 percent target over the medium term and the economic activity proving resilient.
He acknowledged that the risks to growth and inflation appeared broadly two-sided. But on balance, he said, there’s a “slightly higher” chance of the ECB’s next move being down rather than up.
In any case, he said, there is no reason to hold one’s breath: “Unless the sky falls on our head, don’t expect sexy news from Frankfurt this year.”