Carmine Di Noia (OECD): The development of the Greek capital market has been impressive

Over the past 15 years, Greece has made impressive strides in its capital market, reflecting its general economic improvement, says OECD Director for Financial and Enterprise Affairs, Carmine di Noia.

Speaking to Ot.gr during his visit to our country to participate in the International Conference on Corporate Governance organised by SEV and the Hellenic Capital Market Commission, Mr Di Noia says that our country has made significant macroeconomic progress (although it started from a problematic starting point), as evidenced by the improvement in government bond yields compared to other EU countries.

Di Noia notes that Greece has managed its sovereign bond issuance effectively and adds that it is doing an excellent job of managing its public debt. He describes the key to growth as increasing market liquidity by diversifying the supply of equities – including through state-owned enterprises – which favor greater investor participation.

Pension reform

For Mr Di Noia, a notable reform from our country’s side is the transformation of the Greek pension system, in particular by introducing an asset-backed structure in the first two pillars. This reform has the potential to direct more funds to the equity and bond markets, strengthening both.

He also cites the example of other European countries, such as Sweden, which has a strong stock market despite a population of only 10 million, something that highlights the value of tax incentives and special investment accounts to boost market participation.

The Greek market’s emphasis on financial education is also another commendable initiative. Mr. Di Noia said that he has been in contact these days with the Ministry of Finance, the Bank of Greece for our country to participate in the OECD’s PISA financial literacy assessment, adding that the next competition will take place in 2029, but the decision on our country’s participation will be made this year.

Mr Di Noia stressed that in today’s volatile environment, financial literacy is of particular importance

The global regulatory framework

The evolving nature of financial products, including cryptocurrencies, presents opportunities and challenges, as the OECD Director for Financial and Enterprise Affairs notes. While some products align closely with traditional financial instruments and fall within existing regulatory frameworks, others remain unclear.

This ambiguity underlines the importance of transparency and investor education to avoid misunderstandings, such as, for example, the mistaken belief that cryptocurrencies are secured like bank deposits. Innovative technologies, such as blockchain, can enhance the efficiency of financial markets, but prudence is needed to mitigate risks, he stresses. Nevertheless, he notes that not everything needs to be regulated and a compromise between regulation and deregulation should be found.

Does Europe need world champions?

The question whether Europe needs global champions like the US is an important one, notes Mr Di Noia. Efficient capital markets are vital for financing large-scale projects and smoothing economic cycles, he adds. The huge amount of money raised during COVID in stocks and bonds, 7 trillion, shows that we need capital markets to smoothen the cycle when we have these dramatic events.

“It is good to have leaders in the market, but if you are a leader without followers, you are no longer a leader,” he adds. Looking back at US history, he notes that when funding for major projects was needed, having a large and robust capital market had a positive impact on growth.

EU efforts to develop a Capital Markets Union aim to bridge savings and investment between Member States, creating a more integrated and resilient financial framework.

A crucial aspect of this integration is to promote international competitiveness. The development of robust capital markets is essential to support both local and international development initiatives, which also requires striking a balance between regulation and innovation so as not to stifle market dynamism. “If you have developed capital markets, this enables citizens, taxpayers and investors to participate in the growth, not only of companies, but of the country as a whole,” he adds.

Corporate governance

Corporate governance, which was a key topic of discussion at the Conference, is not just a compliance exercise, but a cultural change for Di Noia. Effective governance promotes sustainability and diversity in organizations, creating long-term value.

While diversity initiatives often focus on gender representation on boards, broader diversity in culture, skills and thinking is equally important, he notes, adding that independent directors must have the expertise to challenge and contribute effectively to a company’s strategy.

The EU has introduced directives to improve gender diversity in business leadership, leading to significant progress in many countries, including Greece. However, these efforts need to extend beyond the boardrooms to address systemic issues such as gender pay gaps and wider inequality in the workplace, it concludes.