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Athens News Agency: News in English, 10-01-22

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <>


  • [01] BoG chief: Greece will revive itself from within the eurozone

  • [01] BoG chief: Greece will revive itself from within the eurozone

    Greece must not be allured by the "Sirens" calling on it to withdraw from the eurozone, since it is from within the eurozone that it will be able to more effectively tackle its problems, Bank of Greece (BOG) governor George Provopoulos stressed in an article appearing on Friday in the Financial Times.

    Responding to those who suggest that withdrawal from the single currency (euro) and devaluation of the new ensuing national currency "would be like waving a magic wand, thereby restoring competitiveness", Provopoulos said that they do not take into consideration the experience of the recent past.

    Indeed, Provopoulos pointed out, Greece actually did "wave the magic wand" twice, with substantial devaluations of the then national currency, the drachma, in 1983 and 1985, but "the devaluations were followed by higher wage growth and inflation, with no sustained improvement in competitiveness", due to the absence of long-lasting structural adjustment and sustained fiscal contraction.

    At any rate, such a choice would have the opposite results of those sought, as it would lead to a rekindling of inflation, further increase in lending interest rates, and a big increase in the cost of servicing the state debt, thus undermining the fiscal adjustment, Provopoulos warned.

    The Greek economy, he said, is currently at a crossroads, and "the fact of the matter is that it will be immensely less costly for Greece to eradicate its problems from within the eurozone".

    "Rather than a Greek tragedy, a more appropriate analogy for the Greek economy stems from Homer's Odyssey. In that epic, the enchanting sounds of the sirens enticed sailors to jump to their deaths in the sea. Those who suggest Greece might leave the eurozone are like Homer's sirens. Greece will not be tempted by these short-term options, but will undertake the necessary, bold adjustments. The future of its economy is unwaveringly tied to the mast provided by the euro," Provopoulos concluded.

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