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European Commission

Olli REHN

Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro

Speech Vice-President Rehn's remarks at the Eurgroup Press Conference

Eurogroup/Brussels

4 December 2012

Thank you Jean-Claude.

On Greece, I will also refrain from commenting in any way on the debt buyback operation underway until the results have been announced by the Greek authorities.

On Cyprus, good progress has been made in our discussions with the Cypriot authorities. The convergence reached on the policies to strengthen public finances, to repair and reform the financial system and enhance competitiveness, represents a necessary step towards agreement on an economic reform programme. I look forward to a timely conclusion of the remaining outstanding aspects once we have the results of the due-diligence exercise for banks currently underway in Cyprus.

The key point I would like to make this evening is in relation to an important item on the agenda of tomorrow's Ecofin Council, namely the two legislative proposals to reinforce economic governance.

This so-called "two-pack" on economic governance, indeed further strengthens the economic governance of the euro area by building on what has already been done through the six pieces of legislation adopted last year and the European Semester. These two legislative proposals to further strengthen reinforce economic governance will be one of the essential foundations of the deep and genuine EMU we aim at building, as outlined in the Blueprint presented by the Commission last Wednesday.

In fact, an agreement on the two-pack is a real litmus test, for both the Member States and the European Parliament, of whether they are really serious about building this deep and genuine Economic and Monetary Union. Because we cannot build the walls of this structure until we have finished laying the concrete foundations – and that is what the adoption of the two-pack will achieve. That's why it is essential that the agreement on the two-pack is finalised tomorrow in ECOFIN and next week in the European Parliament.

As a reminder, the first of these two Regulations codifies and clarifies the procedures for enhanced surveillance of Member States that are experiencing, or at risk of, severe financial difficulties. It also links the Treaty framework with the practises for providing conditional financial assistance, for instance through the ESM.

The second Regulation harmonises the timetable for the preparation and adoption of national budgets of the Euro Area Member States. This builds on the principles of ex-ante, or prior, policy coordination enshrined in the European Semester, and will help to ensure that budgetary plans are in line with the country-specific recommendations.

One of the most substantial innovations of this legislative proposal is that it grants the Commission the right to request that a draft national budget be amended, if our analysis indicates that it would not put the country on track to meet its commitments under the Stability and Growth Pact. This will, of course, represent a significant change, which is only a logical step towards ensuring more effective coordination of budgetary policies in the euro area, where we have such strong interdependence - for the sake of financial stability and especially for the sake of sustainable growth and job creation in Europe.


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