Leader in Austerity Push Appointed Head of Greek Central Bank – NYTimes.com

Leader in Austerity Push Appointed Head of Greek Central Bank – NYTimes.com.

By JUNE 11, 2014

The announcement on Wednesday, by the General Council of the Bank of Greece, followed a sweeping cabinet shuffle on Monday that installed Gikas Hardouvelis, another economist and former government adviser, as Greece’s new finance minister. Prime Minister Antonis Samaras overhauled his government to give it new momentum after a weak showing in European Parliament elections last month.

Although Mr. Stournaras, 57, was widely credited with guiding Greece’s return to international bond markets in April and paving the way for crucial debt relief talks in the autumn, he was seen as politically spent after introducing tough measures that have slashed incomes and pushed unemployment to 27 percent. His appointment to the central bank was widely expected to ensure continuity in the government’s reform drive, which international creditors have called for.

Yannis Stournaras is credited with guiding Greece’s return to international bond markets in April. Credit Alkis Konstantinidis/Reuters

Mr. Stournaras, a former banker, would take over from the current Bank of Greece governor, George Provopoulos, whose six-year term expires on June 19. Cabinet approval is considered a formality. Mr. Samaras thanked Mr. Provopoulos on Wednesday for his service, saying the outgoing governor “contributed decisively to the stability of the financial system and the recapitalization of Greek banks in the most difficult postwar period our country has experienced.”

Despite the efforts by Mr. Provopoulos, Greece’s banking sector is still struggling with the repercussions of the country’s debt crisis, with nonperforming loans amounting to 40 percent of the total held by Greek lenders. In a report on Greece’s reform progress published on Tuesday, the International Monetary Fund warned that Greek banks “face a mountain of bad loans that will require adequate capital and oversight to clean up.”

The I.M.F., the European Commission and the European Central Bank have extended Greece two bailouts worth 240 billion euros, or roughly $325 billion, since May 2010 in return for putting into effect a raft of painful austerity measures including cuts to salaries and pensions, as well as tax increases.

In his new role, which also puts him on the Governing Council of the European Central Bank, Mr. Stournaras will seek to improve the fortunes of the Greek banks that will undergo E.C.B. stress tests this fall to determine their additional capital needs.

The appointment of Mr. Stournaras to the Bank of Greece received a terse response from the leftist Syriza party, which won last month’s European Parliament elections on a fiercely anti-austerity platform. “Mr. Stournaras will continue to defend bailout policies from his new post,” Panos Skourletis, party spokesman, said.


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