crucial testing ground for the strategy of “ risk reduction ” in the euro area. although economic activity resumed in 2017, higher and sustainable growth rates require the end of banks ’ deleveraging. this will need to be backed by a comprehensive transfer of bad loans from bank balance sheets, combined with private debt restructuring. the high ratio of npls in greek banks has been an early and highly visible effect of the financial and economic crisis in the country. over the past three years to mid - 2019, the absolute stock of npls fell by about €30 billion, largely through write - offs and sales. moreover, several reforms have also enhanced the framework for private debt resolution : • acceleration of the sale by banks of collateral in defaulted loans through electronic auctions ; • simplification of the sale of npls through the liberalisation of the loan - servicing regime and the introduction of a secondary loan market ; • an out - of - court debt restructuring framework, which also included a write - down of tax arrears, though only a few cases up to now have been concluded under this procedure ; • a reform of the insolvency regime for households and enterprises. ambitious targets for npl reduction have been agreed between the four largest banks and the ecb / ssm, and under a similar framework by the bank of greece for smaller banks. npl ratios 2 / 6 bis central bankers'speeches are to fall to 35 % by the end of this year, and close to 20 % by the end of 2021. it should be noted however that even if these targets are met, greek banks will have more than five times higher npl ratios that the eu average. in this regard, it is important that a truly systemic solution, resembling an asset management company, is implemented in order to complement the individual efforts of each bank to swiftly improve asset quality. greece has been dealing with asset quality issues for many years and now it is the time to speed up efforts in order to approach eu averages within a reasonable amount of time. over the next few months, adequate instruments should be established for an orderly and swift debt resolution, while the european commission should provide the necessary authorisation without undue delays, taking into account the probability of external, worldwide downside risks. it should be reminded that all member states under financial stress have made use of similar systemic solutions, in the form of asset management companies. greek banks have maintained satisfactory capital adequacy ratios and this has been extremely significant for financial stability

environment conducive to growth, low unemployment and financial stability. 1 board of governors of the federal reserve system : " lessons from past monetary easing cycles, " francois de soyres and zina saijid, may 31, 2024, feds notes, washington, d. c. ( https : / / www. federalreserve. gov / econres / notes / feds - notes / lessonsfrom - past - monetary - easing - cycles - 20240531. html ) 2 european central bank ( ecb ) : " delivering a soft landing : a historical perspective of monetary policy cycles, " ema ivanova, thomas mcgregor, stefano nardelli and annukka ristiniemi, september 25, 2024, the ecb blog. ( https : / / www. ecb. europa. eu / press / blog / date / 2024 / html / ecb. blog20240925 ~ bec0a9ffbe. en. html ) 3 malliaropulos, d., e. passari and p. petroulakis ( 2024 ) : unpacking commodity price fluctuations : reading the news to understand inflation ( unpublished manuscript, forthcoming in bog working paper series ). 4 in europe, the pass - through from oil price shocks to wages and core inflation peaks in 1 - 2 years and largely dissipates in 3 - 4 years. see, baba, c. and j. lee ( 2022 ), " second - 6 / 7 bis - central bankers'speeches round effects of oil price shocks – implications for europe's inflation outlook ", imf working paper wp / 22 / 173. 7 / 7 bis - central bankers'speeches