Blueprint for a deep and genuine EMU
The Minister of Finance and President of the Eurogroup Jeroen Dijsselbloem delivered a speech at a debate in Brussels on the future economic, monetary, banking and political union, hosted by the European Commission.
President of the Eurogroup Jeroen Dijsselbloem at the European Commission.
Good Morning Ladies and Gentlemen,
I am pleased to take part in this interesting and important discussion on the future economic, monetary, banking and political union. The subject is fundamental to the future of the European project itself. Many issues of the future union are being discussed at the level of the full EU membership. However, in recent times the Eurogroup has played a significant role in this discussion as well.
The Eurogroup’s recent focus has been twofold: taking decisive action to manage the crisis; and ensuring the crisis’ root causes are permanently addressed to boost jobs and growth. We have looked for permanent solutions to these causes. And it has become obvious that strengthening the fabric of our monetary union and reinforcing our economic governance structures just cannot wait
Game changing measures have been taken:
- The European Stability Mechanism (ESM) now provides a permanent safety net, with the means to support member states in difficulty and preserve the financial stability of the EU.
- Considerable fiscal consolidation is underway, accompanied by far-reaching structural reforms to boost competitiveness in all member states.
- Stronger economic governance is a reality. New legislation has reinforced fiscal and macroeconomic surveillance and coordination.
Ladies and Gentlemen, there is still a long way to go. The EU must not waver in its commitment to achieving sound public finances. The future of the Economic and Monetary Union, but also the future of the European social model, depends on us recognizing clearly that we cannot spend and borrow our way to recovery in a sustainable way. Future investments in education, healthcare and active labour markets policy, are all predicated on sound public finances. Fiscal consolidation may weigh on growth in the short term, but it is an absolute condition for the EU’s prosperity in the middle and long term. But the prosperous future of the EMU also depends on us rebuilding and restoring confidence in the banking sector. This is vital if we are to restore normal lending to hard working businesses and families; it is the fuel of our economy. We must therefore press ahead with the completion of a Banking Union that strengthens bank supervision and delivers genuinely integrated resolution tools.
First, the rapid implementation of agreed rules on bank capital requirements and the Single Supervisory Mechanism is essential. Capital requirement rules will make the financial sector better equipped to manage risks and absorb shocks. The Single Supervisory Mechanism will place all systemically important Eurozone banks under the direct supervision of the European Central Bank. It will also ensure that when banks are in trouble the alarm bell is sounded early, immediate action is taken and the worst can be avoided.
Second, now we must turn our attention to how we resolve failing banks in the event that this is required. To do this fairly and efficiently, we must ensure that those who have profited from a bank's risk taking also bear the cost. A clear hierarchy of claims will need to be agreed in this context. Moreover, deposits up to 100.000 euro should be safeguarded, while the use of public money must be avoided as much as possible. Swift completion of the discussions on the Bank Recovery & Resolution Directive is therefore essential. By ensuring that the private sector bears the primary responsibility for bank resolution, market discipline will be increased and a sustainable, healthy financial sector can be achieved. Furthermore, establishing a Single Resolution Mechanism to ensure the timely and orderly resolution of failed institutions, is a priority. This will reduce resolution costs and speed up the process. And it is the necessary complement to the Single Supervisory Mechanism. Working on the Banking Union is part of my ambition to move the Eurogroup’s focus from crisis management to a more structured debate on how to enhance future growth and competitiveness in the euro area. The jobs lost during the crisis must be replaced, and new jobs must be created for generations to come.
Ladies and gentlemen,
The Eurogroup’s agenda is clear: gradually working towards balancing budgets; strengthening our financial system and keeping up the structural reforms necessary for economic growth in all member states. Where new structures and decision-making processes are required, their democratic legitimacy and accountability must be guaranteed. New mechanisms to increase the level of cooperation between national parliaments and the European Parliament are particularly important in this regard. A genuine economic and monetary union is already in the making. European policies and the underlying choices are too often implicit and have to be made explicit. But we have to realize that in order to involve the citizens of our countries, we have to talk about the choices we make, we have to explain the dilemma’s, the trade-offs and always, always talk about the fairness of our choices and the perspective that comes from our choices.
I thank you for your attention.