BoG Gov. Stournaras details objections to central bank’s regulatory authority over proposed development bank

12 April 2019
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Bank of Greece (BoG) Yannis Stournaras on Thursday tabled his objections, in writing, no less, to a relevant Parliament committee where a draft bill on creating a state-run development bank is being discussed.

Stournaras, considered by the current hard left government as a nagging “thorn in its side”, objects to provisions in the draft bill giving regulatory authority and oversight for the development bank to the semi-independent Bank of Greece.

Specifically, the central banker objects to the BoG being assigned regulatory oversight of a newly created development bank’s activity as a “special purpose credit institution”, or, over financing schemes via credits and guarantees using own capital.

“Our view is that such authority should not be assigned to the BoG… assigning such regulatory responsibility, which cannot be exercised effectively, causes risks, both for the regulatory authority and the supervised entity.”

Establishing a state-owned development bank has long been a “pet project” of Deputy PM Yannis Dragasakis, whose ministry of economy and development has drawn up and submitted the draft legislation.

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