ECB’s Stournaras: Greece’s Crisis Underscores Need for Stronger Euro-Area Architecture

7 November 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Yannis Stournaras on Friday said that Greece’s experience during its debt crisis showed how fiscal imbalances, weak institutions and delayed reforms can threaten stability across the euro area.

Stournaras, who heads the Bank of Greece, told an audience at Milan’s Istituto Bruno Leoni that the country’s path from near-default to recovery offered lessons for both national policymakers and European institutions.

He recalled that Greece entered the crisis with persistent fiscal deficits and lagging competitiveness, as cheap credit after euro-area entry encouraged spending instead of reform. The imbalance, he said, eventually triggered a sovereign debt and banking crisis that spread through the economy.

Successive adjustment programs reversed those trends, turning a primary deficit of more than 10% of GDP in 2009 into a surplus by 2018 and cutting the current-account gap by around 12 points. But Stournaras noted that the turnaround came “at a substantial social and economic cost,” including a 25% loss of output and soaring unemployment.

He said political commitment and credible institutions were essential for sustaining reforms and warned that excessive reliance on austerity could damage growth. “Reforms that excessively depress wages or focus narrowly on one sector can exacerbate recessions,” he said.

Greece’s banking sector, once burdened by nearly half its loans being non-performing, had since been repaired through mergers and asset-protection schemes, he said, adding that no deposits were lost even during the worst of the turmoil.

Stournaras described the economy today as “one of the euro area’s strongest performers,” with growth driven by investment, exports and productivity gains rather than short-term stimulus. He said fiscal discipline and pro-growth policies must work together to sustain convergence.

Turning to Europe’s policy framework, he argued that the absence of effective crisis-management tools and risk-sharing mechanisms had amplified Greece’s troubles. Completing banking union, creating a savings and investment union, and establishing a permanent EU-level safe asset would, he said, strengthen the bloc’s resilience.

“Only through coordinated joint action can the EU hope to close productivity and innovation gaps, reinforce resilience and preserve its strategic autonomy,” Stournaras said.