18 October, 2008
The continuing turmoil on the credit markets and the current state of global as well as the euro zone and Greek economies were at the focus of discussions on Friday between Greek Prime Minister Costas Karamanlis and European Central Bank (ECB) President Jean-Claude Trichet and Vice-President Loukas Papademos in Frankfurt.
In statements to the press afterwards, Karamanlis stressed that developments in the international were unprecedented in the post-war period, adding that the major credit crisis coincided with the sub-prime crisis in the US, both in tandem with the rise in global inflation, a dangerous combination for most of the countries of the world.
Karamanlis also stressed that the impact of the credit crisis had spread to Europe through the interdependence in today's world, resulting in the liquidity problems on both the European interbank market and in the operation of European banks.
The premier expressed satisfaction, however, with the concerted and decisive way in which the EU leadership has acted in the past few days.
"We adopted a broad plan, which contains a series of measures, the goal of which is to restore the citizens' and investors' confidence in the banking system," he said, noting that the plan guarantees the liquidity of the banks so that they may continue to carry out their role. "These measures have already brought results, as the interest rates on the interbank market have started to decline," he elaborated.
Regarding the role of the ECB, Karamanlis described it as "particularly positive', noting that "from the very first moment, under the guidance of its president, Mr. Trichet, it provided substantial liquidity to the banking system".
He said the European Central Bank had displayed full comprehension of its wider role in the course of the European economy, and expressed his conviction that the ECB, in cooperation with the EU governments, would continue to contribute decisively to improvement of the standard of living of Europe and its citizens.
Karamanlis further said that he briefed Trichet on the decisions taken by the Greek government, and particularly the legislation of a minimum guarantee on deposits, as well as on its political commitment for full guarantee of the savings of depositors in banks operating in Greece.
He also briefed the ECB chief on the programme for fortifying the Greek credit system which, the premier stressed, provides the necessary guarantees for the medium-term borrowing of the credit institutions, but stressed, however, the strict conditions and continuous monitoring by the State of all banks entering the credibility restoration program.