Eurozone-landen dringen aan maatregelen tegen 'besmette leningen' (en)
Eurozone finance ministers agreed a range of proposals on Monday (9 February) night on how to deal with ‘impaired assets' held by European banks.
Economy commissioner Joaquin Almunia, who also attended the eurogroup meeting said: "I hope that ECOFIN will adopt the conclusions tomorrow," referring to the EU's 27 finance ministers who are scheduled to meet on Tuesday morning.
Large numbers of assets held by banks - collectively known as ‘impaired' or ‘toxic' assets - are charged with undermining the public's confidence in banking institutions.
Such assets include business and homeowner loans that are now unlikely to be paid back and share holdings in companies faced with bankruptcy.
Eurogroup president Jean-Claude Juncker i said the group would propose a range of methods to purge banks of such assets and it was up to member states to choose the option most suited to their particular situation.
Options are likely to include the purchase of these devalued assets by member state governments followed by their storage and close monitoring in isolated ‘bad banks.'
"But we are very aware of the fact that the way in which you deal with this could have a very serious impact on public finances," he continued, also adding that methods adopted should not give rise to distortions of competition.
For his part, Mr Almunia said three principals should be taken into account when deciding what the value of these ‘impaired' assets should be.
Proper transparency when assessing the value of ‘impaired' assets and the independence of the valuing organization are crucial he said, as is equal treatment of assets regardless of the support measure being deployed.
Likewise adequate burden sharing between shareholders, other stakeholders and representatives of the taxpayers should be enforced when it comes to paying for such schemes.
The United States is expected to unveil its own plan on ‘toxic assets' on Tuesday.
Labour market measures
Mr Juncker said that the labour market outlook was worrying. "Unemployment levels are increasing rather alarmingly and we are assuming that unemployment will continue to grow in the course of this year."
He said ministers had agreed that governments should persuade companies to reduce employee working hours rather than laying off workers completely.
The eurogroup also adopted a note provided by the commission outlining ‘good' and ‘bad' labour market policies.
Good policies are those "which speed up the adaptation and the transitions in the labour market in these times of recession," said Mr Almunia, and are likely to include further training for EU citizens currently out of work.
Stimulus packages and public debt
Mr Juncker said current stimulus packages would have a positive affect on the economy "although we can not expect these to take immediate effect."
However, regarding the rising member state debt used to finance stimulus packages, Mr Juncker said an exit strategy "to take us out of this spiral of deficit and debt" was essential.
The commission will start drafting member state reports over the coming weeks - the first step in excessive deficit procedures under the Stability and Growth Pact, underpinning the euro.
These will be discussed with ministers at the next eurogroup meeting in March.