yannis stournaras : greece - achievements, challenges, risks and a strategy for the future speech by mr yannis stournaras, governor of the bank of greece, at the delphi economic forum, athens, 3 march 2018. * * * the progress made since the beginning of the debt crisis in 2009 is remarkable and unprecedented by international standards. more specifically, greece achieved : the full elimination of the twin deficits, i. e. the very high fiscal deficit and the large current account deficit. the full recouping of competitiveness in terms of labour costs and its considerable improvement in terms of prices. it is worth noting that this was achieved through a painful process of internal devaluation, involving significant reductions in nominal wages and salaries, mainly in the private sector. at the same time, a bold reform, privatisation and economic modernisation programme is being implemented in areas such as the labour and product markets, the healthcare and social security systems, the fiscal framework, the tax system and public administration. ( however, there has been considerable backtracking, according to world bank indices, regarding the rule of law, the quality of governance and institutions. ) as a result of all these major reforms during the eight years of the crisis, the economy has become more extrovert and the production model has begun to rebalance towards exportoriented sectors. finally, the restructuring and consolidation of the banking system, characterised first and foremost by significant recapitalisation, following stringent stress tests and in - depth asset quality reviews, ensure high capital adequacy ratios ( common equity tier 1 - cet1 ), higher than the european average, which, along with a satisfactory npe coverage ratio, enable greek banks to effectively manage their high stock of npes. it should however be noted that, despite the progress made, the crisis has had significant costs in terms of output and employment losses and a marked decline in household wealth. between 2008 and 2016, greece lost over one fourth of its gdp at constant prices, and unemployment rose by nearly 16 percentage points. furthermore, per capita gdp in purchasing power parity in 2016 came to merely 68 % of the eu average, down from 93 % in 2008. meanwhile, a large brain drain has taken place, depriving greece ’ s society and economy of one of its productive parts, with devastating demographic, economic and social consequences. challenges ahead ( a ) public debt sustainability the high level of public debt feeds uncertainty

, until recently either unavailable or technically unfeasible. digital transformation can strengthen competition and the supply of innovative products and services, often across borders. this means that businesses in smaller countries like greece can penetrate international markets and obtain financing for their innovative ideas. furthermore, the new financial technology ecosystem can function as an incubator for cooperation between incumbents and start - ups, benefiting all participants across financial sectors. against this background of innovative technologies combined with financial services, regulators and supervisors are responsible for ensuring the smooth functioning of the market within their respective mandates. innovation can bring about major changes in the way businesses operate and market their services, but with these changes come potential new risks. these risks involve specific aspects of technologies or how they are applied. also, heavy reliance on technological infrastructures can increase vulnerabilities in terms of information security. the bank of greece, as an innovation facilitator through the establishment of the fintech 1 / 3 bis central bankers'speeches innovation hub in 2019, the adoption of relevant regulation, including on digital onboarding, outsourcing, psd2, and now the launching of the regulatory sandbox, seeks to understand the various aspects of innovation and to help harness its potential, while limiting any inherent risks. in this context, i would like to focus on the three main reasons for implementing the regulatory sandbox. regulatory sandboxes are globally seen as mechanisms facilitating financial technology, just as innovation hubs are. as you probably know, the bank of greece has been operating its own innovation hub since 2019 and recently published a report on the second year of its operation. the primary objective of the regulatory sandbox is to provide an additional mechanism facilitating the supply of innovative financial services and products, while at the same time safeguarding the efficiency and stability of the financial system. it is important to note that, as is the case with similar initiatives of other authorities mostly in the eu, the regulatory sandbox that we are launching today is a regulated environment and should not be perceived as a testing ground where laws and regulations do not apply. rather, its purpose is to enable market participants and the bank to engage in a constructive dialogue that will translate into potential regulatory reforms and help to strike the right balance between financial innovation and risk reduction. as already seen from the queries we have received through the innovation hub, the integration of innovative technological features into financial services can give rise to uncertainty about the existence of a relevant regulatory framework or the applicability of the