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Brussels, 24 January 2014
Preparation of Economic and Finance Ministers Council, Brussels, 28 January
The EU's Council of Economic and Finance (ECOFIN) Ministers will take place in Brussels on 28 January at 10.00. The European Commission will be represented by Olli Rehn, Vice President and Commissioner for Economic and Monetary Affairs and the Euro and Michel Barnier, Commissioner for Internal Market and Services. A press conference is expected to take place after the meeting.
Implementation of the Single Supervisory Mechanism: state of play (CH)
On 12 September 2012 the Commission adopted two proposals for the establishment of a single supervisory mechanism (SSM) for banks led by the European Central Bank (ECB). The proposal for the SSM regulation aimed to confer upon the ECB specific supervisory tasks over credit institutions in the Euro area. The accompanying proposal for the regulation on the European banking Authority (EBA) aimed to introduce limited amendments to the Regulation setting up the EBA to ensure a balance in its decision making structures between the euro area and non-euro area Member States (see IP/12/953).
The rules adapting the operating rules of the European Banking Authority (EBA) to this new framework entered into force on 30 October 2013 and on 4 November 2013, the SSM Regulation entered into force. This mechanism will be fully operational in November 2014.
In the meantime, the ECB is actively preparing to take up its new role of supervisor. The ECB is currently carrying out a comprehensive assessment of all banks which will be under its direct supervision and the balance sheets of those banks. In parallel it is recruiting high quality supervisory staff (MEMO/13/1155) and building up a new supervisory structure that integrates national supervisors before it commences its activities.
The establishment of the Single Supervisory Mechanism (SSM) is a first step towards a banking union and one of the pre-conditions for direct recapitalisation by the ESM. An integrated “Banking Union” will also include a common bank resolution mechanism, underpinned by a single rulebook.
During the upcoming ECOFIN Council meeting, ministers will take stock of the operational implementation of the SSM.
Commissioner Barnier welcomes the significant progress made towards operationalizing the SSM over the last months which will allow for a smooth transition to the new supervisory regime.
Presentation of the Greek Presidency's work programme (SOC, CH)
At the start of the Greek Presidency of the Council, the Economic and Finance Ministers will discuss the priorities of the Council in the field of economic and financial affairs for the first half of 2014. The Presidency programme aims at supporting growth and employment and restoring confidence in the financial sector.
The Commission agrees with the Presidency that the focus should be on effective implementation of the economic governance mechanisms (including the European semester) and on improving the financing of the economy.
The Commission also shares the view that it is essential to finalise the legislative work underpinning the banking union before the end of this legislature. (for an overview of what has been done so far to create a robust financial framework for all 28 Member States and where we stand in building the banking union see MEMO/14/57)
Further, the Commission welcomes the Greek Presidency's determination to make progress on key tax files. These include agreement on widening automatic exchange of information within the EU (Administrative Cooperation Directive IP/13/530), progressing the Financial Transaction Tax under enhanced cooperation, and pushing forward the political debate on the Common Consolidated Corporate Tax Base (IP/11/319). The Greek Presidency will also seek progress on other important tax files, including the Standard VAT Return (IP/13/988) and VAT Vouchers (IP/12/464).
Implementation of the Stability and Growth Pact – Decision on the existence of an excessive deficit in Croatia (SOC)
Croatia joined the European Union on 1 July 2013 and as spelled out in the Accession Treaty, it is now subject to the procedures for the surveillance of the excessive deficits as laid down in Article 126 of the Treaty on the Functioning of the European Union (TFEU).
In view of the high deficit and debt levels for 2012 reported by the authorities in the autumn, subsequently validated by Eurostat, and the further deterioration in the deficit and debt ratios in 2013 and over the forecast horizon (2014-15), as shown by official projections and the Commission forecasts, the Commission adopted a Report on 15 November 2013 based on Article 126(3) TFEU. The Commission report concluded that Croatia's deficit and debt are in breach of the reference values in the Treaty. On 10 December, the Commission proposed to the Council to open an Excessive Deficit Procedure for Croatia on account of both the deficit and debt criteria (see MEMO/13/1124).
In order to put an end to the excessive deficit situation, the Commission recommends a credible and sustainable fiscal consolidation path. More specifically, Croatia should correct the present excessive situation by 2016 and reach the following annual deficit targets of 4.6% of GDP for 2014, 3.5% of GDP for 2015 and 2.7% of GDP for 2016. This adjustment path would also ensure that the debt ratio approaches the 60%-of-GDP reference value at a satisfactory pace, thus complying with the government debt criterion. The correction of the excessive deficit would benefit from much needed macro-structural reforms to reinforce the growth potential of the economy, by creating a more flexible labour market, improving the quality of the business environment and increasing the efficiency of public administration.
The Commission also recommended that the Council set a deadline of 30 April 2014 for Croatia to take effective action (i.e. to publicly announce or take measures that are sufficient to ensure adequate progress towards the correction of the excessive deficit) and to report in detail on the consolidation strategy it will put in place.
EU Finance Ministers will discuss the EC Recommendations and are expected to adopt a Council Recommendation to correct the excessive deficit and bring the debt path in line with what is required.
Follow-up to the European Council meeting on 19-20 December 2013 – Implementation of the Compact for Growth and Jobs (SOC)
The Compact for Growth and Jobs agreed by Heads of State or Government at the European Council in June 2012 (MEMO/12/497). It contains a wealth of measures to help Europe move beyond the economic and financial crisis and to create smart, sustainable, inclusive, resource-efficient and job-creating growth. It is designed to ensure faster progress towards the goals set out in the Europe 2020 strategy.
The conclusions of the European Council meeting on 19-20 December highlighted that the Compact for Growth and Jobs remains one of the EU's major tools to restore sustainable, job-creating growth and strengthen EU competitiveness.
The European Council underlined that the EIB had met its 2013 lending targets under the Compact and that the adoption of the 2014-2020 Multiannual Financial Framework and associated financial programmes support the achievement of the Europe 2020 Strategy. While substantial progress has been achieved in a number of areas, efforts should be pursued to ensure that the potential of the Compact is used to its fullest extent. In particular, the European Council called for enhanced efforts as regards the swift adoption of remaining legislation under the Single Market Acts I and II, and the swift implementation of the measures they contain. Further actions to reduce the burden of regulation are also necessary.
The Council will exchange views on the implementation of the Compact for Growth and Jobs further to the last European Council meeting.
The Commission will reiterate its commitment to work with the European Parliament and the Council to secure its swift implementation.
Other items – Current legislative proposals
The Council will be updated on current legislative proposals.
Enormous progress made in recent weeks to find compromises on a whole raft of legislative procedures which ensure that we are learning all the lessons of the financial and implementing the G20 commitments. The following weeks will be crucial to finalise those compromise amendments and reach agreement on outstanding files in particular:
The supervisory system needs to be complemented by an integrated European resolution system for all countries participating in the banking union, which also requires action to restructure non-viable banks when necessary.
That is why the European Commission has proposed a Single Resolution Mechanism (SRM) for the Banking Union on 10 July 2013 (IP/13/674), which includes a single resolution board and a single resolution fund so we can tackle future bank crisis efficiently with minimal costs to taxpayers and the economy.
The SRM will basically apply the substantive rules of the draft Bank Recovery and Resolution Directive (see IP/12/570 and MEMO/12/416) in a coherent and centralised way ensuring consistent decisions for the resolution of banks.
During the upcoming ECOFIN Council meeting, the Greek Presidency will update the Economic and Finance Ministers on the on-going trilogues on the SRM proposal and on discussions on the intergovernmental agreement regulating the functioning of the Single Resolution Fund.
Commissioner Barnier welcomes the efforts and commitment of the Greek Presidency to achieve rapid agreement on the SRM proposal. He welcomes Member States' overall support for an effective single resolution mechanism. Flexibility on both sides will be essential to find a final compromise text. The timetable is critical to allow finalising the legislative work underpinning the banking union before the end of this legislature.