Synopsis of Training Day of the 8th ECB Simulation Conference
The Training Day serves as the inaugural day of the annual ECB Simulation Conference for university students, where distinguished representatives from institutions, businesses, and academia share their knowledge and experiences with the participants.
The Training Day for the 8th Conference took place at the Bank of Greece on November 22, 2024.
The key themes of the Conference were:
- Monetary Policy: The interaction with Fiscal Policy, the risk of fragmentation, and the challenges of effectiveness in a permacrisis environment.
- Climate Change and the transformation of the financial system in the field of ESG.
- Digital Euro: The impact on the payments landscape and financial stability.
The 8th Conference was made possible thanks to the invaluable support of the Bank of Greece, the Hellenic Bank Association, Alpha Bank, PwC Greece, the National Bank of Greece, and the Athens University of Economics and Business.
Here, we highlight the positions of the speakers of the Training Day of the 8th ECB Simulation Conference. We are greatly honoured to have speakers such as Mr. Costis Hatzidakis, Minister, Ministry of National Economy and Finance, Mr. Gikas Hardouvelis, Chairman of the Board of Directors, National Bank of Greece & Hellenic Bank Association, Mr. Michael McLoughlin, Member, Economic and Monetary Union and Economic and Social Cohesion (ECO), Employment, Social Affairs and Citizenship (SOC) & External Relations (REX) Sections, European Economic and Social Committee, Ms. Ifigeneia Skotida, Deputy Director, Economic Analysis & Research Department, Bank of Greece, Mr. Ronan Sheridan, Deputy Head, Public Communications Department, European Central Bank, Mr. Christos Hadjiemmanuil, Professor, University of Piraeus, Visiting Professor, London School of Economics & Member of the Monetary Policy Council, Bank of Greece, Mr. Nikos Magginas, Chief Economist, Head of Economic Analysis Department, National Bank of Greece, Mr. Konstantinos Gravas, PhD, Global Political Economy and Monetary History & Lecturer, Department of Economics, Athens University of Economics and Business (academic years 2022 –2024), Mrs. Louka Katseli, Senior Independent Non-Executive Director, National Bank of Greece (Cyprus) & Professor Emeritus, National and Kapodistrian University of Athens, Mr. Dimitris Kazazoglou – Skouras, Group ESG Coordinator, Alpha Services & Holdings S.A, Ms. Phoebe Koundouri, Professor of Economics at the Athens University of Economics and Business & Technical University of Denmark, President of EAERE, Co-Chair of SDSN Europe, Director of AE4RIA, Mr. Konstantinos Drakos, Professor, Department of Accounting and Finance, Athens University of Economics and Business, Mr. Antonis Ballis, Director of MSc FinTech, Lecturer (Assistant Professor) in Finance, Aston Business School, Mr. Christos Kalandranis, Assistant Professor of Corporate Finance, Department of Accounting and Finance, University of West Attica and Mr. Dimitris Anastasiou, Assistant Professor, Athens University of Economics and Business.
Opening Remarks
Mr. Kostis Hatzidakis addressed critical economic and political issues, focusing on the challenges and opportunities of the Greek and European economies. He began by discussing on the income support measures which were in effect during the pandemic, which resulted from expansionary monetary policies, followed by a shift to contractionary policies due to the energy crisis and high inflation. He highlighted the importance of fiscal discipline and praised the Stability and Growth Pact and the ECB for ensuring European economic stability.
Moving forward, Mr. Hatzidakis emphasized the significance of the green transition, referencing natural disasters that recently took place in Valencia and Thessaly. He spotlighted the Recovery and Resilience Fund, where 40% of resources are allocated to green initiatives, and outlined ministry initiatives for sustainable finance, such as integrating green aspects into the state budget and adopting Sustainable Development Goals.
Regarding the digital euro, Mr. Hatzidakis clarified that it represents an official electronic form of payment, universally accepted across the eurozone and issued by the ECB. This innovation is expected to reduce Europe’s dependence on non-European providers, thereby enhancing strategic autonomy.
Concluding, he stressed the need for European unity to address geopolitical and climate challenges and highlighted the importance of educating young people on these issues, emphasizing that younger generations hold the key to the future.
Mr. Gikas Hardouvelis initiated the Training Day by presenting the developments, challenges, and prospects of the Greek banking system. He stressed the relatively small size of the banking sector in Greece compared to other European countries (with assets amounting to just 146% of GDP). He highlighted the critical role of banks in the domestic economy, representing 25% of the Greek stock market capitalization.
Mr. Hardouvelis emphasized significant improvements in Greek banks over recent years, which included the sharp reduction in non-performing loans (NPLs), from 50% in 2015 to 5% today, a return to normalized borrowing levels and the exceptional performance of Greek Banks in the 2023 stress tests.
He also underlined the importance of corporate governance, banks’ leadership in digital transformation, and their gradual recovery in international activities. Looking ahead, he stressed the need to maintain profitability amidst declining interest rates, the need to adapt to technological advancements and to strength the Banks’ compliance with ESG standards. Mr. Hardouvelis concluded by pointing out banks’ social contributions, such as investments in education, healthcare, and environmental protection, and their pivotal role in the green transition.
Mr. Michael McLoughlin closed the opening speeches by presenting how the EESC aims to involve young people in decision-making processes and actions.
He began by introducing the various groups within the EESC and proceeded to analyze the “Youth Test,” an initiative designed to enhance active youth participation in policymaking (in which Get Involved participated). This initiative engaged youth working groups from diverse social and academic backgrounds, fully integrating them into the official discussions of the EESC’s thematic committees. The youth’s contributions were reflected in the committees’ conclusions, with key opinions published on a dedicated section of the EESC website.
Mr. McLoughlin also emphasized the EESC’s broader efforts to amplify youth voices through initiatives such as the annual Youth Forum. He concluded by underscoring the importance of raising awareness among individuals not directly involved, such as young people outside of universities or those who have not completed their education.
Keynote Speeches
Next speaker was Mr. Ronan Sheridan, who elaborated on the role of communication in enhancing the effectiveness of the ECB monetary policy. He specifically highlighted trust and credibility as the cornerstones of the ECB’s operation, emphasizing that the ECB does not address individual states but all member states collectively, with their diverse cultures and languages. He stressed the importance of avoiding overly technical language and terminology to ensure that the ECB’s messages are accessible and easily understood by the broader public, without requiring prior knowledge.
Mr. Sheridan then drew attention to the method of delivering messages and engaging with the public, underlining the necessity of using clear and simple language. He showcased the example of the “Monetary Policy in Simple Terms” initiative, which simplifies key messages, incorporates visual aids, and is distributed in all official languages of the Eurozone.
Additionally, Mr. Sheridan addressed the challenges the ECB faces in bridging the trust gap with the public, which has persisted since the global financial crisis. He emphasized the importance of utilizing modern communication channels, such as social media, to reach younger generations and enhance the ECB’s digital presence. He concluded by stating that communication must remain at the heart of the ECB’s efforts to ensure stability and maintain public trust.
The keynote speeches began with Ms. Ifigeneia Skotida, who, in her central address, presented the challenges of inflation and monetary policy in the Eurozone. She started by analyzing the emerging challenges of recent years, focusing on supply disruptions that triggered inflation surging to historic highs. Exogenous shocks, such as the pandemic and the war in Ukraine, created trade restrictions, skyrocketed energy prices, and increased the cost of living, thereby placing central banks in the unprecedented position of tackling historically high inflation levels both within and beyond the Eurozone.
Ms. Skotida went on to explain the decisive actions taken by the European Central Bank (ECB) to combat inflationary pressures. These actions included significant interest rate hikes and gradual adjustments to its balance sheet, all aimed at price stabilization. She particularly highlighted the achievement of a general de-escalation in prices, with inflation now nearing the desired target. Through close coordination with the Governing Council, the ECB leveraged the monetary policy transmission mechanism, implementing stringent measures to mitigate the impact on inflation expectations.
She further emphasized the ECB’s commitment to preventing financial fragmentation through the use of various tools. Ms. Skotida underlined the need for complementary structural and fiscal reforms to enhance productivity, resilience, and economic competitiveness. Concluding her speech, she reassured that the ECB remains steadfast in its commitment to price stability while also contributing—reasonably—to economic growth. Acting as an anchor of trust, the ECB adjusts its policies with flexibility to address future challenges effectively.
The keynote speeches concluded with Mr. Christos Chatziemmanouil, who analyzed the dynamic relationship between the digital euro and monetary policy, focusing on its role as a tool for modernizing the payment system and its implications for the European economy and banking sector. He explained that Central Bank Digital Currency (CBDC) represents a new form of legal tender and ledger-based money.
Specifically, he noted that the digital euro would function as an electronic payment instrument, complementary to cash, strengthening the strategic autonomy and transparency of the Eurozone. He emphasized its potential to reduce payment fragmentation, enhance e-commerce, and limit dependency on non-European third-party providers.
However, Mr. Chatziemmanouil also highlighted the risks posed to the banking system. He pointed to the potential loss of deposits from banking institutions, as funds held in digital wallets could restrict banks’ ability to provide loans. He also discussed scenarios of potential bank runs, which could destabilize the financial system. A digital euro without retention limits could enable the rapid transfer of large amounts of capital within minutes, potentially causing significant instability in the banking system.
Furthermore, he noted that not all countries agree on the necessity of developing the digital euro, with Austria and Germany expressing the strongest opposition. Finally, Mr. Chatziemmanouil stressed that the digital euro would not be used as a tool for monetary policy, as this could mislead the public and negatively influence market expectations, ultimately threatening the stability of the economic system.
Monetary Policy: The interplay with fiscal policy, the risk of fragmentation, and the challenges of effectiveness in a permacrisis environment
The Training Day continued with the discussion between Mr. Nikos Magginas and Mr. Konstantinos Gravas highlighted the complex relationship between monetary and fiscal policy, pointing out that monetary policy, designed by central banks, and fiscal policy, implemented by governments, should ideally work in harmony to promote stability and economic growth. They also explored the challenges and opportunities that arise during times of crisis.
Mr. Magginas highlighted the effectiveness of monetary policy in recent crises. He noted that interest rate hikes, combined with a surplus of deposits and declining non-performing loans, are paving the way for a return to normalcy in the economy and boosting the profitability of banks. He further underlined the need for Europe to invest in the credibility of its financial system and act more swiftly to seize opportunities, such as the Recovery and Resilience Facility.
Mr. Gravas stressed that fiscal prudence is a prerequisite for effective monetary policy. He provided examples from the Eurozone, where the ECB played a pivotal role in market stabilization through quantitative easing programs, which helped protect vulnerable economies and alleviate fiscal pressures. He also emphasized on the importance of avoiding fiscal dominance, which could undermine the ECB’s independence, and advocated for European fiscal integration as a key condition for safeguarding the economy against future challenges.
In closing, both speakers underscored the importance of Europe’s strategic autonomy, its enhanced geopolitical role, and, by extension, the attractiveness of the euro as a global currency. They also encouraged the young audience to adopt an approach that emphasizes continuous education, innovation, finding work that provides moral satisfaction, and dedication—key elements for fostering development, prosperity, and the creation of resilient economies.
Climate change and the transformation of the financial system in the ESG sector
Continuing the discussion panel Mr. Dimitris Kazazoglou-Skouras presented Alpha Bank’s practices for integrating ESG principles, emphasizing the importance of sustainable financing. Alpha Bank strives to ensure that the businesses it finances are sustainable, giving a particular focus on investments in renewable energy sources and the circular economy. He gave the example of the maritime sector, where the transition to “green ships” remains in an experimental stage, requiring a framework for evaluating technological investments that combines banking expertise with engineering specialization.
Highlighting the National Energy and Climate Plan, he noted that the green investments required by 2030 amount to €100 billion — a sum that exceeds the capacity of the banking system. This underscores the urgent need for fostering synergies both within the private sector and between the private and public sectors. Alpha Bank supports sustainable development across the entire value chain by financing businesses and their suppliers. However, the lack of mature organizations and the complexity of the licensing framework pose significant challenges.
Closing his remarks he emphasized that despite these difficulties, ESG principles represent a unique opportunity for sustainable growth. The main risk lies in inaction, as failure to act is estimated to result in incalculable costs.
The discussion of the panel was initiated by Ms. Louka Katseli, who highlighted the challenges and opportunities the financial sector is facing in adopting ESG principles. She emphasized the evolution of ESG principles from the 1980s to the present day and underscored their importance for sustainability and growth within the financial industry.
Ms. Katseli stressed the role of banks and financial institutions in promoting investments with positive social and environmental impacts. She also pointed out the growing importance of complying with EU regulatory requirements, such as the European Green Deal and the CSRD Directive. She presented the green bond and social loan markets, which now exceed trillions of dollars globally.
She discussed the results of the ECB’s climate stress tests, which underscored the need to accelerate the green transition. Additionally, she highlighted the critical role of artificial intelligence and blockchain technology in enhancing transparency and managing ESG data. Lastly, she underlined the opportunities for attracting investments and strengthening business resilience while noting potential risks, such as greenwashing and the increased compliance costs faced by small and medium-sized enterprises.
The panel concluded with a recorded contribution from Ms. Phobe Koundouri, who highlighted the critical roles played by the scientific community, governments, businesses, and other stakeholders in financing and implementing sustainability initiatives.
She began by emphasizing the need for interaction between academia and governmental and corporate leadership with the aim to develop innovative strategies for sustainable development, stressing the importance of education and training. She pointed out that decisions should align with guidelines such as the European Green Deal and the United Nations’ 17 Sustainable Development Goals (SDGs), which extend beyond environmental concerns to encompass economic and social resilience.
A central theme of her address was securing the human, financial, and natural resources necessary for the green economy, with particular emphasis on the systematic and updated valuation of natural resources. She also highlighted the importance of a clear action plan to monitor each country’s progress toward achieving SDGs.
Ms. Koundouri further stressed the necessity of transforming ESG systems into a unified and definitive framework, revising corporate action plans, and leveraging new technologies, such as artificial intelligence, to optimize their value.
In conclusion, she drew attention to the need for a redesign of global financial architecture, proposing lending terms that would enable developing countries to invest in green and digital transitions while ensuring geopolitical and financial stability.
Digital Euro: Impact on the payments landscape and financial stability
Following the presentation of Mr. Drakos, Mr. Dimitris Anastasiou presented the innovation of the Digital Euro, emphasizing its transformative potential for the financial sector. He highlighted that the Digital Euro is expected to revolutionize the industry by enabling 24/7 payments, both online and offline, while complementing cash. This will offer greater operational efficiency and will lower costs for cross-border transactions, enhancing global competitiveness.
To guarantee financial stability, Mr. Anastasiou noted that the ECB plans to implement restrictions on the amount of funds that can be held in Digital Euros and the scope of transactions through digital wallets. These measures aim to prevent significant deposit outflows from banks, ensuring the financial system remains undisturbed.
He further outlined the benefits of the Digital Euro, such as promoting financial inclusion, particularly for the 6% of Europeans without a bank account, and generating new revenue streams for banks through innovative services. However, he cautioned about challenges in cybersecurity, the substantial investment costs required for new technologies, and the potential for deposit outflows to digital wallets. This concern is particularly relevant for Greek banks, which have a smaller deposit base compared to their European counterparts.
The discussion panel concluded with Mr. Antonis Ballis, who addressed the challenges and opportunities associated with the Digital Euro, drawing lessons from the example of China’s digital currency (Digital Yuan). He noted that China has implemented a successful pilot program, setting different transaction limits for verified and unverified users. This approach has prevented deposit outflows while attracting foreign capital inflows.
Referring to Europe, he highlighted that the ECB has been slow in implementing the Digital Euro, allowing space and time for the private sector to develop alternatives such as stablecoins. He warned of the risk that depositors may lack incentives to keep their funds in traditional banks due to low interest rates, potentially leading to deposit losses.
Mr. Ballis further emphasized that discussions around the security and anonymity of digital currencies often lack substance, considering that existing technologies already face security challenges. He proposed the need for thorough public education and awareness campaigns about the Digital Euro to ensure its understanding and acceptance by the public. Lastly, he stressed that delays in the rollout of the Digital Euro could create a void that private initiatives might fill, posing significant risks to the monetary stability of the Eurozone.
The final discussion panel of the Training Day began with Mr. Konstantinos Drakos, who provided a comprehensive overview of the Digital Euro, emphasizing its necessity and strategic importance. He stated that the ECB must accelerate its efforts in developing the Digital Euro, as any delays would not be beneficial. He described it as an innovation with the potential to transform the financial sector, reducing the dependency on non-European payment providers, and enhancing financial inclusion, particularly for individuals without access to banking services.
While acknowledging the objective challenges associated with the Digital Euro, Mr. Drakos highlighted its potential to act as a catalyst for innovation and competitiveness. He noted that it could strengthen trust in public money and facilitate the transition to digital transformation.
Moving on, Mr. Christos Kallandranis analyzed the prospects and challenges of the Digital Euro, emphasizing the need for adaptability and foresight in digital transformation. He clarified that the Digital Euro is not intended to replace cash but to strengthen the existing currency by serving as a parallel, fully convertible means of payment.
He highlighted the significant increase in digital transactions in Greece, where approximately 50% of payments are digital, and 20% of interbank transactions are executed instantly through systems like IRIS. He explained that the Digital Euro can enhance trust in public money by providing secure, transparent, and cost-effective transactions. He also emphasized that, unlike cryptocurrencies, the Digital Euro offers stability, regulatory compliance, and the integration of new technologies.
Additionally, Mr. Kallandranis pointed out Digital Euro’s potential for both online and offline use, ensuring privacy and accountability while reducing dependence on non-European payment providers. Despite challenges such as cybersecurity risks and the need for investments in the banking sector, he stressed that the Digital Euro will act as a driver of innovation and operational efficiency, bolstering financial inclusion and the international competitiveness of the Eurozone.
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