many times in the past but in vain. do you believe that the stability of the greek government, given the fact that its parliamentary majority is smaller, could be in danger if new measures are needed? “ it is undisputed that we have a fiscal gap for the years 2015 – 2016. we have to see how big it will be. then we have to discuss, as part of the medium term fiscal strategy ( mtfs ), how to close it. we need a credible mtfs in order to re - enter capital markets. this is unavoidable. i understand the difficult political situation and the majority situation in the parliament but as i said one should not unravel what has been achieved – with political pain – up to now. and the question is : what is the credible alternative to this? so i would really focus the efforts on growth enhancing measures because they create jobs. we need to balance between the two pillars of the program ”. bis central bankers ’ speeches are you aware of any eu - oriented measures to help enhance growth in greece because this seems like the only way funds can be poured into the greek economy? the greek banks are still not able to lend and from the greek government we listen mostly wishes. how can we push for growth? “ first, the program has a number of product market reforms to increase the growth potential, but it takes time to feed into the economy. on the eu side, one can make much more use of structural funds. currently, they are used only partly, because there is a lack of sustainable projects. any bilateral help is also welcome. we must undertake a joint effort to reach a critical mass of structural reforms so that investors from inside and outside the country are convinced that we are creating a positive momentum ”. even though all banks, especially in southern europe, are provided with liquidity they seem unwilling or unable to transmit it to the real economy. in greece we are facing a suffocating credit crunch. what was your message to the central bank governor and what do you think about the situation of the greek banking sector? “ the banking part of the program has been a real success. all four core banks have been recapitalized and thus financial stability has been restored. i do not know what the outcome of the blackrock exercise will be and the results will be known by the end of the year. there is a buffer in the bank stabilization fund and if a need arises, this is an assurance to financial stability and

, the june 2020 projections also include two alternative scenarios, a mild one and a severe one, based on different assumptions regarding the further progression of the virus and the necessary containment measures. both monetary and fiscal policies play a crucial role in supporting the recovery in the euro area. fiscal policies at national and eu level have been crucial in mitigating unemployment risks, bolstering household income and supporting investment by firms. in order to achieve a broadbased recovery, national measures must be backed up by forceful action at the european level. we welcome the new €750 billion eu recovery instrument which consists of €500 billion in grants and €250 billion in loans to member states. the sharp contraction in economic activity is also reflected in the inflation slowdown. headline inflation decreased further to 0. 1 percent in may, from 0. 3 percent in april, mainly on account of the continued fall in energy prices. over the coming months, inflation is expected to be close to zero percent, averaging 0. 3 percent in 2020, before slowly recovering to 0. 8 percent next year and reaching 1. 3 percent in 2022. the inflation projection is also subject to unprecedented uncertainty, with a faster recovery in the mild scenario. financial markets 1 / 4 bis central bankers'speeches euro area financial markets were set in turmoil as the virus spread throughout europe : euro area sovereign bond spreads widened, corporate bond spreads surged and stock prices plummeted. financial markets eventually stabilised, notably on the back of a forceful monetary policy response by the eurosystem. but the monetary accommodation generated by the decline in riskfree rates has only slightly eased the tightening in financial conditions caused by the decline in stock prices and the increase in euro area sovereign and corporate bond yields. the widening of sovereign bond spreads – on account of the macroeconomic outlook and the sizeable fiscal policy responses endorsed by national governments – is particularly troubling from a monetary policy perspective. an effective pass - through of risk - free rates to sovereign bond yields in all countries is crucial because sovereign bond yields are widely used as benchmark rates for pricing financial market instruments and bank credit. evidently, the costs banks face to raise funding in the money, capital and equity markets have notably increased. monetary policy measures tightening financial conditions, combined with an outlook for price stability that had significantly worsened due to the economic fallout of the covid - 19 crisis, prompted the ecb ’ s governing council to take further policy action at its june policy meeting. we decided that the