Varoufakis: Official government line was that country was bankrupt

Former Finance Minister calls for Stournaras to step down

In an article in newspaper “Efimedida Ton Syntakton”, former Greek Finance Minister Yianis Varoufakis responds to the allegations levelled against him by the governor of the Bank of Greece (BoG), Yiannis Stournaras during his deposition before the parliamentary committee on transparency. In his article Varoufakis calls for the removal of Stornaras from his position as governor. The former Finance Minister admits that while in talks with Greece’s creditors he did refer to Greece as a bankrupt state, adding that in an informal meeting, on February 1, 2015, with IMF representative Paul Thomsen, Commissioner Moscovici and Karre, he had told them it was “time to stop pretending that the Greek state was solvent and acknowledge it was bankrupt and try to continue forward with a debt restructuring”. In his article, Varoufakis explains that when he visited ECB President Mario Draghi, on February 4 he was informed of the decision to exclude Greek banks from the ECB’s liquidity program. Varoufakis presented four reasons for the replacement of Stournaras, citing article 4 of the Bank of Greece’s articles of association, which states the BoG should back the Greek government’s general economic policy, something Stournaras did not during the negotiations with the country’s creditors, as he had urged Draghi to disregard the opinion that Greece was bankrupt put forward by Varoufakis. The second reason is the statement made by Stournaras on December 15, 2014, when the head of the BoG said that “liquidity in the market was drying up” and that “this would cause irreversible harm”, two statements Varoufakis dubbed “unprecedented” in the history of banking coming from the mouth of a central banker. He says these statements caused a massive flight of capital from the country, adding that they were the precursor to strangle the Greek government, which had not even been elected yet. The third reason he gives in his article is that Stournaras has displayed incompetence as supervisory body of the Greek banking system, pointing to the unchecked lending to political parties and media businesses. Finally, Varoufakis dubs Stournaras as scientifically inept, while also displaying signs of self-importance and arrogance as he presented himself as the “saviour” of the country.