Greece’s financial landscape was shaken this week after a landmark Supreme Court ruling on the so‑called Katseli Law, but the governor of the Bank of Greece, Yannis Stournaras, moved quickly to reassure markets and the public that the banking system will remain stable.
Speaking on public radio, Stournaras emphasized that all necessary provisions have been taken to ensure Greece’s financial stability won’t be undermined by the court’s judgment, even as he awaits the full written reasoning behind the decision.
“Details play an important role,” he noted, underlining that the central bank is closely monitoring developments.
A Court Decision with Wide Social Impacts
The February 5 ruling by the plenary session of the Supreme Civil and Criminal Court (Areios Pagos) sided with borrowers in a dispute over how interest should be calculated on loans covered by the Katseli Law (Law 3869/2010) — a debt‑relief framework originally enacted to protect struggling households.
By a broad majority, the court decided that interest should be calculated based on the monthly installment amount rather than the total outstanding loan balance — a change expected to reduce installments substantially for approximately 350,000 borrowers, and in some cases make them nearly interest‑free.
Although Stournaras refrained from commenting directly on the substance of the ruling, the implications are clear: borrowers could see relief, but banks may face balance‑sheet pressure depending on implementation and technical details.
Swiss Franc Loans and Government Action
Addressing related concerns, Stournaras also praised recent government measures on loans denominated in Swiss francs, asserting that authorities have done “the best possible” to protect borrowers while maintaining overall financial resilience.
“In any case, the Bank of Greece is here precisely to provide technical assistance on these matters,” he added, signaling ongoing cooperation between regulators and policymakers.
Political Stability as “Intangible Capital”
In what might be seen as a subtle political nudge, Stournaras described political stability as perhaps Greece’s most important “intangible capital.” He warned that in an international environment marked by geopolitical instability, tariffs and trade wars, confidence at home is a prerequisite for economic resilience.
“I cannot imagine this stability being called into question,” he said, framing it as a hard‑won achievement that helped Greece emerge from the prolonged post‑crisis era.
Social Inequality and Broader Economic Confidence
The governor also touched on social inequality, acknowledging it remains a significant challenge but noting gradual improvements over time. He emphasized that year‑by‑year progress is measurable and should not be forgotten, especially compared with where Greece stood a decade ago.
Behind the Reassurance: Tensions Still Linger
Stournaras’ confident remarks may calm investors in the short term, but they also sit atop simmering concerns over the efficiency of Greece’s judicial and financial systems. Previous comments from the Bank of Greece have highlighted slow judicial procedures and the drag they place on economic activity and dispute resolution — a factor that could complicate the practical effects of the Katseli decision.
Moreover, the interplay between political stability and economic confidence continues to be a sensitive topic in national discourse, with critics pointing to ongoing debates about structural reforms, non‑performing loans, and the broader path of Greek recovery.
Source: pagenews.gr