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