yannis stournaras : greece and the global economy - prospects and main challenges ahead speech by mr yannis stournaras, governor of the bank of greece, at an event organized by credit suisse, athens, 11 october 2017. * * * ladies and gentlemen, it is a great pleasure for me to be here with you tonight and have the opportunity to share my thoughts on the prospects for the greek economy against the backdrop of brighter prospects for the global and euro area economy. i will focus on the following issues : first, i will say a few words about the international environment. second, i will present the progress that has been made in greece since the start of the crisis. third, i will discuss the outlook for the economy and outline the main risks and remaining challenges that must be addressed. fourth, i will discuss the preconditions for a sustainable recovery of the greek economy. finally, i will make some remarks about the need to improve the emu architecture. 1. the international environment the global economy is maintaining a solid pace of expansion. business and consumer confidence indicators suggest that sentiment remains upbeat, while financial conditions in advanced economies remain supportive, underpinned by accommodative monetary policies. financial markets in emerging market economies remain resilient and capital flows towards these economies are robust. looking ahead, global economic activity is expected to accelerate moderately. improving activity in advanced economies is underpinned by monetary and fiscal policies. in emerging market economies, growth is expected to remain resilient in commodity importers, while activity in commodity exporters will bottom out after deep recessions in these economies. world trade is projected to expand in line with global activity over the medium term. nevertheless, there are several medium to long - term challenges affecting the prospects of the global economy. first, productivity growth has slowed across advanced, emerging market, and low - income countries at a time of significant innovation and technological change. second, income inequality has increased in advanced economies, leading to growing dissatisfaction among electorates and a sharp swing in sentiment against globalization. third, the generally low level of global inflation and wage growth, especially in advanced economies, is linked, inter alia, to globalization, labour market slack and labour ’ s weakened bargaining position, the growing importance of services, increases in labour supply and more work of a temporary and part - time nature. these, difficult to predict, changes have affected the position and the slope of the phillips curve in these economies, that

the banker – law and brother – promised redemption in the currency of the weight of metal it contained at the date of issue of the paper. in other words, a classical fractional reserve bank. all went well for some time. the financial position of the government was eased ; prices began to rise ; business and business confidence improved. the banque royale flourished. trouble arrived in 1719 when law decided to found a company, the mississippi company, to exploit and bring to france the very large gold deposits which america was said to have in abundance. to this end, he sold stock and shares to the general public, the intention being to use the proceeds to finance gold mining in america. the gold was to be added to the reserves of the banque royale to support an increased issue of notes – which notes had by now become a generalised means of exchange. the problem lay with the french authorities. for the proceeds of the sale of stock went to them ; not to the fictitious gold mines in america. only the interest on the loans made to the authorities on the basis of the share issue was available to finance the said gold mines. as galbraith ( p. 35 ) notes : “ that the government of france was an even more unappealing investment than gold mining in the louisiana swamps, or even that it and not louisiana was the object of the investment went unnoticed – at least initially. ” and law, whose name was converted in french speech to the better - sounding lass, became the most highly regarded man in france ; on 5 january 1720, he was made comptroller general of france, in recognition, it was said, of his financial genius. then the bubble burst. one prince, early in 1720, offended by his inability to buy stock at what he considered a fair price sent a pile of notes to the banque royale to be redeemed in hard currency. it was quite a pile, needing three donkey - carts for the journey. but, to cut a long story short, there was not enough hard money on hand at banque royale to redeem the notes. chaos ensued. law ’ s reputation was ruined ; business became depressed ; prices fell and a general depression ensued. and what became of our financial genius, the comptroller general of france? why – he went to venice and, having for a decade lived in decent poverty, a quiet and virtuous life, died there in the catholic faith, piously receiving the sacraments of the church.