Voorzitter Eurogroep Dijsselbloem benadrukt belang bankenunie op financieel forum in Hong Kong (en)

It is a great pleasure to visit this bustling part of the world. Coming from Singapore and having spent my Sunday here in Hong Kong, I witnessed the can-do mentality everywhere I went. A symbol of that mentality is the miraculous construction of the HongKong-Zhuhai-Macau bridge; the longest bridge in the world [50 km, 31 miles] with the largest piles ever driven. As a Dutchman I was proud to hear that Dutch expertise was used for the pile driving. The bridge is one of the many examples of Asian success in recent decades and also of efficient cooperation between Asia and Europe.

Given the intensive cooperation you have with Europe, I can imagine that you're interested to know what is going on in the euro zone. You probably know the expression 'never waste a good crisis'. Well I don't want to say it was a good crisis, but we certainly did not waste it. But we have taken the opportunity. And as a result we have become stronger. We have demonstrated that we can weather the storm. We have strengthened our economies. There are 500 million consumers in the EU that are looking for quality goods. EU member countries account for 19 percent of imports and exports worldwide: we are a major player on the global trading scene. And are also the second largest trading partner for this region.

Of course, the crisis hit us hard. Yet the euro area has gained strength. In the second quarter of 2013 growth has returned in almost all of our countries and we expect a further acceleration of growth in 2014. Domestic demand and exports are contributing more strongly to growth. Confidence in Europe is reviving, both from companies and consumers. And this is reflected in the financial markets.

As President of the Eurogroup, I will show that the euro area remains a very strong trading partner for Asia and the world alike. And a good investment opportunity. Because we are building on solid foundations. Because European leaders have taken decisive action to safeguard the euro over the difficult period behind us. And because our recovery and growth strategy will deliver a resilient financial system, and make our economies more competitive and our growth sustainable.

In Europe we first responded to the financial crisis by providing assistance to the countries that experienced a loss of market access. We built new institutions, like the ESM, to take effective action to support these countries. This has proved to be the right approach: Ireland, after three years, and Spain, after only one year, finished their programmes last month. And other countries are firmly committed to balancing their budgets and reforming their economies.

But we went beyond just crisis response. We strengthened our monetary union in three areas. First, we focused on sound fiscal policies. Second, we are boosting growth potential by reforming our economies. And, third, we are establishing a banking union to restore confidence in banks as well as the euro. Let me explain these three different elements in more detail.

First, sound fiscal policy. We realise of course that consolidation measures, commonly known as austerity, may not have a direct positive effect on growth. But it is crucial for sustainable growth and confidence that we clean up the high debts and deficits. Fiscal consolidation in the euro area is now bearing fruit. The average government deficit is expected to fall below 3 percent of GDP in

2014, and the aggregate debt level will stabilise. The euro area has proved itself considerably more effective in its fiscal policy than for example the United States. These efforts are backed by a considerably strengthened coordination and correction framework. You may have heard about what we call the sixpack and the twopack.

Second, our focus is on restoring growth and getting it on a sustainable track. Sustainable in this context means: growth, based on strong yet flexible economic fundamentals, not so much relying on cheap credit as was done in the past.

The OECD estimates that European countries can each gain between 5 and 20 percent extra growth over the next ten years by implementing structural reforms. That will foster a dynamic business climate, enabling us to remain an interesting business partner for the rest of the world.

All of our European countries, and I stress all countries, have additional growth potential. There is an agenda for structural reform to be fullfilled in all countries. As the World Bank explains in its report 'Golden Growth', Europe has been a powerful engine for convergence, enabling countries that lag behind to catch up with more advanced economies.

Moreover, structural reforms have accelerated over recent years, with the crisis acting as a catalyst. In its 'Going for Growth report', the OECD presents the achievements of reforms in Europe over the last two years. Greece, Italy and Spain have reduced regulatory barriers to competition. Ireland and Slovakia have strengthened R&D and innovation incentives. Countries like France,

Italy, the Netherlands and Portugal have reduced the insider outsider problem in their labour markets. And all Eurozone-countries are dealing with demographic challenges, coming from aging populations. We are raising the age of retirement and dealing with the costs of health care. These are just a few of many examples of the recent efforts made throughout the Euro zone. We will continue with measures to improve the functioning of our product and labour markets. Measures on taxation, human capital and innovation.

Third, we are creating a European banking union at unprecedented speed. We want to strengthen the banks, radically reducing risks for the sovereigns and taxpayers. But most of all we want banks to supply credit to our companies to realise new growth. Our focus to do so is threefold: supervision, buffers and resolution. As for European banking supervision: we have designed a banking union in which the European Central Bank will be given direct and indirect supervision over all euro area banks.This will enable us to apply the same standards to all banks, and to match the international scale on which many of these banks operate. We have also introduced regulations

that force banks to build stronger buffers against possible shocks, fully in line with the Basel standards.

They require EU banks to keep sufficient capital reserves and liquidity in order to adequately manage banking risks and absorb any losses. And last but not least we have designed a European resolution mechanism, in case a major bank gets into trouble. If that happens there will be a clear resolution mechanism including a set of rules to apply bail-in of equity and junior bondholders and if needed in exceptional cases senior bondholders. In that order. The absolute last resort will consist of a resolution fund stocked by the sector. On which a public guarantee will be available to ensure necessary means in the fund.

The European Central Bank will complete a comprehensive assessment of the 130 systemically relevant banks under its direct supervision in the course of this year. The banks will undergo a risk assessment, an asset quality review and finally a stress test. This thorough exercise has three main goals:

First to foster transparency and to enhance the quality of information available on the condition of the banks. Secondly to take corrective action where necessary. And thirdly to build confidence by assuring all stakeholders that banks are fundamentally sound and trustworthy. This will lay a solid basis to allow banks to get funding and to increase lending to private sector business. And therefore strengthen growth in the Euro zone.

Ladies and gentlemen, to summarise. Looking back over the recent years I believe one of the main lessons we have learned is that there is no time for complacency. Like Asia in the nineties, Europe is hit hard and had to take painful measures. But also just like Asia, Europe has seized the opportunity to make itself stronger. And will continue to do so. We haven't merely established a crisis resolution framework. We have developed a sound fiscal policy. We are boosting sustainable growth through structural reforms. And we are establishing a banking union. These efforts will secure the euro as a strong currency and enable us to remain a central pillar of the world economy.

They will make our economies more resilient to future shocks and keep our growth on a sustainable track.

On that sound basis I sincerely hope we will be able to step up the cooperation between Asia and Europe. Given our strong links and the opportunity to learn from each other, we should see each other not as competitors but first of all as partners. We can benefit from one another's growth, prosperity and best practices. Together we can produce and consume more and better products. Together, we can and should accelerate sustainable world growth. The trade agreements between the Euro zone and countries in this area will accelerate growth. They will open up new markets for goods and services, increase investment opportunities, make trade cheaper and faster and make the policy environment more predictable.

Let us join forces, let us together accelerate growth. Both here in Asia and in the countries of the eurozone.

Thank you for your attention.