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Since Greece has effectively defaulted as a result of the policies pursued over decades, the Troika has no reason to have confidence in the Greek political system. That system can control bank supervisors over the intermediate run.  Bankers are at the same time the favourite kicking cans of politicians.   Hence it all goes back to politics. Greece had a strong banking sector, which has achieved a lot and even moved beyond the Greek border.  The Troika knows this and does not want the same political system that has led to the collapse of the local economy to deal with the banks, directly or indirectly.  European lenders know that in order to save the banks, there should be temporary nationalization, but not one that gives ability to politicians to mingle in the banks. So, the lenders have set conditions to keep politicians away from bank management and bank financing.

What is the outcome of the present situation?

Three-four banks in the country remain healthy. These are the banks represented in Bulgaria, Romania, Turkey and other countries in the region. They have proven that they can cope (before the debt haircut). The final outcome after 3-5 years should be larger, stronger, private banks. 

There is the view that the consolidation of banks could threaten the competitiveness of the financial market in the country, that a banking cartel could be formed, which would not allow transparency and would control interest rates not on the basis of a market principle. What do you think about this statement?

Things are tending towards a banking union in Europe. The eurozone cannot remain as it was before. It will either integrate or disintegrate – an option that nobody wants because it would be too costly to everyone in Europe. A closer integration of the banking sector, of general bank assurance, resolution and supervision is coming too. Economic integration will come, which will probably be late, but it will be implemented by the issuance of some short of Eurobonds and more fiscal coordination. We cannot stay where we were before. This model no longer works.

This new model should not perceive the National Bank of Greece, Alpha Bank, Eurobank or Piraeus as only Greek banks, but as banks of the eurozone. The size of Greek banks compared with the eurozone is quite small. In the case of an economy, that has open borders and where the consumers can take out even a housing loan from a British or a German bank via the Internet, we can talk about competition. When there is a larger integration, competition becomes easier because you're going to compete with more banks, and the market expands. So, I do not think that the restructuring of the Greek financial sector now will make the banking market in the country more oligopolistic.

Market liberalization and public sector reform are the two things in Greece for which laws have been constantly enacted and which are not fully implemented in practice subsequently. Why is that?

In general, the introduction of structural reforms in all economies and countries carries short-term political costs. These reforms directly and immediately (negatively) affect specific groups of people but give results in the long run. It is not true just for Greece but also for other countries. The government has a certain period of time to act. In most cases, making changes that will affect the political clientele is avoided. It is not easy to push measures supporting the common good that trample on the individual interest of someone who has helped you get elected or reach a certain position.

Isn’t this way of thinking a luxury during the bailout agreement?

Yes, it is a luxury, but the Greek political elite did not understand in early 2010 that the period we were entering would bring a huge change to the Greek economy and society, that the familiar past was over. The overwhelming majority of politicians believed that it was another small recession, like the one that the majority of countries had experienced in 2008 and 2009. Bulgaria passed through a similar recession in this period as well, but then recovered. Here, however, things were different.

Few of the participants in the government at the time had realized that it involved changing the entire framework of the Greek economy. In the beginning, they took some fiscal measures to slightly reduce the deficit – they cut wages,  pensions a little, reformed the social security system, began to reorganize the central government, the Ministry of Finance began to control the expenditure of other ministries more closely. There were significant changes in the first four months of the first bailout, between May and October 2010, but subsequently many deep and necessary structural reforms were postponed.