Remarks by Jeroen Dijsselbloem at the press conference following the Eurogroup and IGA meetings of 10 March 2014

Remarks by Jeroen Dijsselbloem at the press conference following the Eurogroup and IGA meetings of 10 March 2014

I would like to debrief you on the outcome of two meetings we had this afternoon and this evening - the regular Eurogroup meeting and the special meeting on the Single Resolution Fund and specifically on the IGA - the Intergovernmental Agreement. I will start with that last subject and then say something about the discussion we had on the direct recap instrument for the ESM and then report on our discussion on the economic situation and on last week's Commission communication and recommendations and finally go into the state of play on the number of countries that were discussed today: Greece, Cyprus and Portugal.

• 1. 

  Special meeting on the IGA on the SRF

First of all this evening we had a meeting where all countries were present including the European Parliament for the special meeting on the IGA regarding the Single Resolution Fund. We made a very good progress on the text of the Intergovernmental Agreement. I cannot go into all details of our conclusions tonight. Because these talks also are part of the discussions that we will continue over the next couple of days, first of all tomorrow in the Ecofin as well as in the trilogue on Wednesday with the Parliament. So we have to keep all these elements together in the process.

The main issues we discussed tonight were:

First of all - possible measures to provide the Single Resolution Fund with adequate liquidity. We have explored possibilities to have a shorter and/or a faster mutualisation period. We have also discussed how to enhance the borrowing capacity of the Fund.

The decision-making process related to the temporary lending between the compartments of the Fund and we have agreed on that issue that the Member States concerned should keep a framed right of objection to the Board's decisions. In other words, there is the possibility of lending or borrowing between compartments, it's a decision to be taken by the fund if that's necessary or unnecessary. Member States can object during the transitional period but only under the limited number of conditions or simply at the board's discretion.

The third issue tonight was the bail-in rules, the respect of the rules on bail-in as a pre-condition for the use of the Single Resolution Fund. We all agree, indeed, that the cost of bank failures should be borne by the financial industry and not by taxpayers. We have confirmed tonight that the details of such overarching principles could only be changed if all Member States agree to do so. In other words if in the future the rules on the bail-in were to change then that could also have affect on the contracting parties commitment to the fund and we worked out the legal solution for this issue.

1

The burden sharing in case of cross-border group resolution which is an important issue for Member States whose credit industry consists of many subsidiary banks also called host countries. We have agreed on a balanced compromise preventing asymmetrical affects in the distribution of resolution costs and that issue also seems to be solved. As I said I can't go into all the details of the exact legal text at this point as they all will be part of the comprehensive agreement in the end with the Parliament. The finalization of the Intergovernmental Agreement is subject to an agreement with the Parliament on the SRM, so there is also the right order in which we will take these decisions.

Tomorrow we will hopefully have a fruitful discussion at the ECOFIN on the SRM regulation.

Then on Wednesday, an important, and hopefully conclusive, trilogue will take place with the European Parliament on the SRM regulation.

Once that has been reached we will finalize the Intergovernmental Agreement in order to ensure consistency between the two texts and at that point, we shall be able to sign the IGA.

Most importantly, tonight's meeting confirmed that all participants - including the European Parliament's representatives that were present as observers - all of us wants to reach a final agreement on the SRM package by the end of March, in time before the end of the current parliamentary term.

So attention now turns to the ECOFIN meeting. I am confident that the Presidency and Parliament negotiators will bring the process to a successful conclusion.

• 2. 

  ESM direct recap

We have reviewed the operational framework of the future ESM direct recap instrument and made very good progress towards resolving the last outstanding issues and came very close to a solution. We will come back to it at our next meeting.

• 3. 

  Economic situation

We quite intensively spoke about the economic situation and situation in terms of budgets, macroeconomic imbalances in different countries on the basis of the introduction by Commissioner Rehn. We of course welcomed the positive news on the economy in the euro area over the last few months, which indicates that the economic recovery in the euro area is gaining strength and confidence is improving.

2

At the same time, we acknowledge that the recovery still is slow and fragile, as the legacy of the crisis such as financial fragmentation, economic uncertainty, debt issues and the cost of the necessary adjustment - is expected to fade only gradually. Therefore, a simultaneous strong implementation of further structural reforms and a continued fiscal consolidation effort are important to return to a needed higher and sustainable growth path.

We focused our discussion on the Commission's surveillance package, adopted on 5 March, as well as the follow up to our assessment of the draft budgetary plans under the new two pack rules which we discussed last November. So we came back to the discussion that we had last November on the draft budgets.

In this regard, we took note of the Commission's recommendations regarding measures to be taken by France and Slovenia in order to ensure a timely correction of their deficits. We welcomed the commitment by these countries to take measures as needed to ensure full compliance with the procedure and to take the necessary steps to meet the required structural fiscal effort.

We welcomed the current assessments that Malta and Spain comply with their recommendations under the Excessive Deficit Procedure.

Furthermore, we took note of the Commission's in-depth review underlining the importance of the macroeconomic imbalance procedure for durably addressing imbalances to create conditions for sustainable growth and jobs.

We asked the euro area Member States concerned to address in their upcoming National Reform Programmes and Stability Programmes the issues identified in the in-depth reviews. We will return to this issues once the Commission has assessed the policy measures, including whether further steps are needed, and has issued recommendations in the context of the European Semester.

In this context, we will again revisit the action taken by euro area Member States in order to address the risks identified by the Commission following-up to the commitments made at the Eurogroup meeting of 22 November 2013.

Furthermore, we will assess in April and May the updated draft budgetary plans that will be submitted by those Member States which were in the process of forming new governments in autumn of 2013. That was Germany, Luxembourg and Austria, so their budgetary process is still going on and we will come back to those countries in April and May.

3

• 4. 

  Programme countries

Finally regarding the programme countries, on Greece:

We took note of the progress made since the return of the Troika to Athens two weeks ago. However further work is needed on several fronts before the review can be closed. But as I understand it from the institutions that progress has been made and we can be slightly optimistic that a result will come out over the course of this week. We called on Greece to do its utmost from their side so that the review can be concluded rapidly.

We also took note of the results of the supervisory stress test and asset quality review of the six Greek banks and the ensuing estimates for the banks' recapitalisation needs.

We expect that the necessary capital is now injected swiftly into all the banks and is raised first and foremost from private investors. We welcomed that two banks have announced recapitalisation plans going beyond the requirement stemming from the test.

On Cyprus, we welcomed the Troika's confirmation that Cyprus has complied with the agreed prior actions and endorsed in principle the next disbursement of EUR 150 million by the ESM. You will find further details in the statement that has been distributed.

Finally on Portugal we welcomed the conclusion of the Troika that the adjustment programme for Portugal remains on track. The economic outlook is becoming stronger over the course of the last months. We much welcomed this development and the latest steps taken by the government to regain fuller market access.

We will take stock of the discussions on Portugal's exit strategy at our next meeting at the beginning of April. As you know, the Portuguese programme comes to an end mid-May so we will come back to that in April or at the beginning of May the latest.

4