ATHENS – Bank of Greece Governor Yannis Stournaras said European banking policies will protect Greece’s still-shaky institutions but that vigilance is still needed.
With Greece’s stock market rocked by fears of political instability and this month’s crucial attempt to elect a Greek President or the prospect of early national polls, Stournas, a former finance minister for Prime Minister Antonis Samaras, said that the European Central Bank has improved safeguards for banks.
“Today we witness a containment of systemic stress,” Stournaras, who is also a member of the ECB’s Governing Council, told a conference in Athens. “However, this should not make us complacent,” he added.
Stournaras said the search for yield in a very low interest rate environment, persistent pressure on bank profitability and new worries about the sustainability of sovereign debt burdens were a major concern.
“In this environment, macro-prudential policies need to ensure that financial intermediaries can withstand a potential reversal of risk premia, while at the same time further initiatives are needed to monitor and assess vulnerabilities in the shadow banking sector,” he said, according to Reuters.
Stournaras would not talk directly about political developments as Samaras, the New Democracy Conservative leader, hopes to fend off an attempt by the major opposition Coalition of the Radical Left (SYRIZA) to block his man for President and force national polls with surveys showing the rivals leading.