G. Stournaras: € 5.5 billion of investments financed by the Recovery Fund

He called on banks to take additional provisions to cover the new wave of rising red loans.

He stressed the need for the emergency fiscal and monetary measures currently being implemented in the context of dealing with the effects of the pandemic, to be phased out once the health situation normalizes.

Responding to questions from representatives of institutions involved in the online dialogue under the ECB's initiative to review the Eurosystem's monetary policy strategy, the BoG governor said that both monetary policy and the functioning of the euro area is much more flexible after the end of the pandemic.

As he has already said, at the Eurogroup level, discussions are underway to replace the existing Stability Pact, which will be much more flexible than the existing one. He stressed that in order to avoid the so-called cliff effect after the end of the pandemic, the withdrawal of the measures applied today in both the fiscal and monetary fields should be gradual.

Particularly for the banks' risk of over-indebtedness recurrence, Mr. Stournaras said that the credit institutions in the country have already made products in order to "reintegrate" the borrowers who were subject to a temporary suspension of their installment payment. But he called on banks to take additional precautions, given that the previous crisis has taught us that timely and adequate coverage of bad loans was more effective in tackling the problem.

Regarding the public debt, he claimed that the particularly low yields of Greek bonds, which, as he said, are mainly a result of their inclusion in the pandemic program (PEPP) implemented by the ECB, improve its viability.

He predicted that due to the extraordinary fiscal measures implemented by the government, it is inevitable that the public debt will be increased. However, as he said, a critical parameter is the growth rate of the economy: as long as it exceeds the nominal lending rates of the State, the situation will be controlled. In any case, the idea of ​​debt relief that the ECB has in its portfolio is rejected.