ioannis papadakis : combatting the impact of the financial crisis welcome remarks by mr ioannis papadakis, deputy governor of the bank of greece, at the european bank coordination meeting, athens, 19 march 2010. * * * it is an honor and a pleasure to welcome you to athens for the european bank coordination meeting, hosted by the bank of greece and co - organized with the european commission, the imf and the ebrd. moreover, i am very pleased to be given the opportunity to share with you some preliminary thoughts on the achievements of our efforts to support imf programs in the region through concerted private sector involvement. the financial crisis that erupted in 2007 is now in its third incarnation. having started as a crisis affecting certain marginal financial markets in the us, it subsequently spread fast with its impact being felt on the financial and the real sectors of most economies in the world. in its current incarnation, it is turning into a fiscal crisis, as markets realize the true cost of the measures implemented to minimize the damages and the impact on the macroeconomy. in addition, the crisis has brought to the fore a number of weaknesses and deficiencies in the functioning of the international financial system, putting the effectiveness of the supervisory and regulatory framework under the microscope. the discussion regarding the origins of the crisis and the work that needs to be done has created a long list of “ do ’ s and don ’ ts ”. it has also led to an even more lively and lengthy discussion about the appropriate means to achieve the ultimate goal and the timing of the required measures. let me briefly mention five areas of action, which i believe deserve priority : first, there is need to deal effectively with short - termism in the quest for high profits, by protecting the system from the incentives created by excessive bonuses and the irrational pricing of risks. second, the transparency of financial markets and structures needs to be enhanced by putting greater emphasis on risk disclosure by systemically important institutions, instruments and markets. third, the pro - cyclicality of the financial system needs to be mitigated by improving both the quality and quantity of bank capital and by ensuring that banks create enough prudential liquidity buffers in good times to have reliable shock - absorbers on which to depend, if and when bad times come. fourth, there is a need for a macro - prudential approach to financial supervision that takes into account not only the links between financial behaviour, economic activity and macroeconomic

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