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European Commission - Statement

5 President's report on EMU: Readout from the College meeting by Vice-President Dombrovskis

Brussels, 01 July 2015

Today, the Commission discussed the next steps on the "5 Presidents' Report" on completing Europe's Economic and Monetary Union.

Recent developments have created significant uncertainty about the future of Greece and its economy. We stand by the Greek people and the door for negotiations are still open.

Many developments so far confirm that important steps have been taken in recent years to make our Economic and Monetary Union more stable and more resilient.

Whatever the course of events in Greece, I am convinced that the Economic and Monetary Union is able to weather them.

As the Eurogroup reconfirmed on the 27 June, "the euro area authorities stand ready to do whatever is necessary to ensure financial stability of the euro area."

In short time, in the past few years, we have built:

1) Stronger governance within the Stability and Growth Pact and better coordination of economic policies across the EU with the European Semester;

2) A Banking Union, based on a single rulebook to stabilise the financial sector;

3) Firewalls, such as European Stability Mechanism with a firepower of 500 billion euros to help the most vulnerable economies.

The ECB is making full use of its tools to ensure price stability, and the European Court of Justice has recently confirmed the Outright Monetary Transactions.

Yet, current events also remind us that to make EU thrive, we need to finish the work and complete EMU as soon as possible.

The report prepared by President Juncker in close cooperation with Presidents Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz has traced the way forward.

We must pursue the path of reforms and reinforce the foundations of the EMU, as a place of prosperity based on balanced economic growth, price stability, a sound financial sector and competitive social market economy.

We started to sharpen our plans for the short-term today, and we see two main strands of work:

First, there is a strong case for accelerating steps to complete the Banking Union.

Financial stability is precondition for growth and economic convergence. There has been much progress. The Single Supervisor is in charge of supervising Europe's banks, and a Single Resolution Mechanism will manage bank failures when they occur.

It is vital that Member States fully put in place their deposit guarantee schemes; fully transpose the Bank Recovery and Resolution Directive, and quickly complete ratification of the inter-governmental agreement on the Single Resolution Mechanism.

But more needs to be done to break the link between banks and their national sovereigns.

Before the Single Resolution Mechanism becomes fully operational in 2016, it must have enough upfront funds available in the Single Resolution Fund at all times, even before it is filled through contributions from the banking sector. 

We must bring a new momentum to negotiations on this so-called "bridge financing."

We also need to move quickly towards a common backstop for the Fund. It should be fiscally-neutral over the medium term.

In addition, the Commission will start consulting widely on the best ways to shape a European Deposit Insurance Scheme. Establishing such a scheme will take time. But consultations must start now.

The second strand of work should be to reinforce Europe's economic governance framework.

The Commission will present a Communication on a revamped European Semester in the autumn, re-launching the next year's Semester.

We should, for example, strengthen the use of macroeconomic imbalances procedure, and better integrate a strong social dimension.

In that context, we would also prepare proposals for a targeted and stability-oriented review of the 6- and 2-pack.

Strengthening EMU also implies a strong voice at international level. In October we will come forward with a proposal on the external representation of the Euro area.


So to conclude,

European Economic and Monetary Union is a community of solidarity and responsibility.

Commitment to solidarity and responsibility means upholding common principles and rules, and having strong common institutions.

The Commission is ready to provide all its expertise at the service of building a stronger Economic and Monetary Union.

We cannot do it alone of course, so we intend to consult closely with the Member States and other European institutions in the weeks and months ahead.

Thank you.


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