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BoG head Stournaras says problems with competition to blame for high prices in Greece

Featured BoG head Stournaras says problems with competition to blame for high prices in Greece

Bank of Greece governor Yannis Stournaras suggested that a problem concerning competition was responsible for the high prices seen in the market, in an interview the newspaper 'Proto Thema' released on Monday.

 "The large concentration leads to high prices. This is also why we see relatively higher prices in Greece than in the eurozone for many goods and services. This is also reflected in Eurostat's recent findings, which show that while GDP per capita in Greece stands at 67% of the average in EU countries, its price levels are at 88.2% of the corresponding average. That is the reason why Greece is more expensive than other countries relative to income. This is why high prices in Greece create a serious problem for many households. Of course, this is not a recent problem, but it comes from the past."

For this reason, he argued that it was possible, with conditions, to reduce the VAT rate, which at 24% is one of the highest in the eurozone. However, he explained that the priority is not the reduction of VAT but the reduction of social security contributions at work.

On the issue of competition in the banking system and low interest rates on deposits, the governor of the Bank of Greece argued that banks can offer deposits and loans in accordance with the laws of supply and demand, provided that they respect the supervisory framework. But the Bank of Greece can create more competitive pricing conditions through the empowerment of smaller banks, which, either alone or merged, will contribute to increasing competition in the banking system.