The need to adopt innovative and sustainable fiscal solutions due to the increase in Public Debt in the Eurozone was underlined by the governor of the Bank of Greece, Giannis Stournaras, opening the work of the Conference with the theme “Public debt: lessons of the past, challenges of the future”.

As he pointed out, Europe is currently at a crossroads, faced with increased levels of debt due to successive recent crises, such as the global financial crisis of 2008, the public debt crisis of 2010-13, the pandemic, but also the energy crisis that caused by the war in Ukraine.

Consequently the challenge it faces today requires “constant vigilance and adaptability. In the event that debt levels lead to increasing vulnerabilities, the need for innovative and sustainable fiscal solutions will be more pressing than ever,” he said. He added that the decisions we take today will determine not only the financial stability of Europe, but also the well-being of future generations. Striking the right balance between promoting growth, ensuring fiscal sustainability and protecting the long-term interests of our societies is not an easy task, but it is a matter of collective responsibility.

In his intervention, the Governor of the Bank referred to the lessons learned from the recent debt crisis in the Eurozone. In summary, these concern:

a. The importance of stricter fiscal surveillance and the need for reliable enforcement mechanisms, with the establishment of the Fiscal Compact and the creation of the European Stability Mechanism (ESM).

b. The high price that Greece was forced to pay due to the imposition of overly restrictive fiscal measures. Therefore, a more flexible approach to fiscal policy is required which could have mitigated the intensity of the crisis.

c. National ownership of fiscal adjustment efforts is critical to the success and sustainability of fiscal reforms.

d. Adopting the so-called stochastic debt sustainability analysis, as debt sustainability is not only about reducing debt ratios, but must also ensure that debt levels remain manageable under different economic conditions.

e. The need to adopt flexibility in servicing the debt.

f. The adoption of a coordination framework for the supervision of the financial sector with the creation of the Single Supervisory Mechanism SSM.

g. The need to develop macro-preventive policies that will include tools designed to address systemic risks.

or. The need to ensure high capital adequacy for banks.

Th. The weakening of the vicious circle of state banks.

After the speech of Mr. Stournara was followed by the keynote address by Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley.

Two sessions will then take place: the first on “Long-Term Perspectives and Parallels” and the second on “Recent Experiences and Prospects”.

The conference will conclude with two round table discussions. The first is dedicated to the interaction between debt and monetary policy and will include Mr. Stournara, the member of the Executive Committee of the European Central Bank Philip R. Lane and the former Governor of the Bank of Spain Pablo Hernández de Cos. In the second, Mr. Stournaras, the Minister of National Economy and Finance Kostis Hatzidakis and the Director General of the Foundation for Economic and Industrial Research (IOBE) Nikos Vettas will discuss the prospects of the Greek economy.