Good afternoon. We had a very productive meeting today, and a relatively short one - I hope you appreciate that.
In the June Euro summit, Leaders asked us to make further progress in all areas of the euro area reform plan included in my letter to President Tusk. This progress should be delivered in time for the December summit. As this is the second semester, we have little time and a lot of work to do over the coming months. Let me briefly recall the three workstrands that we have:
First, on the Banking Union, we will need to work on a roadmap for beginning the political discussions on a European Deposit Insurance Scheme (EDIS). We also need to work on a possible framework for liquidity in resolution; and on measures to enhance the organisation of anti-money laundering (AML). We should also monitor progress with risk reduction. Finally, we should keep track of agreements reached on banking legislation and subsequent implementation.
Second, on reform of the ESM, we need to prepare a term sheet by December 2018 covering the following elements: (i) the common backstop to the Single Resolution Fund; (ii) the review of the ESM toolkit, in particular precautionary instruments and possible new instruments; (iii) a stronger role of the ESM in programmes; (iv) debt sustainability issues; and (v) a review of how the ESM is governed.
Finally, on fiscal capacity, we have two proposals by the Commission on the table - a stabilisation function and a reform delivery tool, within the Multi-annual financial framework (MFF) framework. In my letter to President Tusk, I have mentioned other ideas which should be pursued further: a possible euro area budget and an unemployment insurance fund, while acknowledging the concerns around moral hazard and the open questions on how these ideas could be financed.
All this will require further work. We will be more focused in our discussions in each of the upcoming Eurogroups, without prejudice to taking decisions as a package by December.
For our second agenda item, we took stock of economic developments based on the Commission forecast that was published today. Growth was very positive last year. It is now settling at a steadier pace. Despite the risks in the global economy, namely with tensions on trade, we are confident in the strength and resilience of the euro area economy. Years of reforms are now paying off. Employment is up. But clearly there are important challenges ahead in the global economy so we need to stay the course and continue sound economic policies.
Economic forecasts are the starting point for our fiscal policies. Under our third item today, we discussed the budgetary situation and prospects for the euro area as a whole. Professor Thygesen presented the report published by the European Fiscal Board last month. We agreed that rebuilding fiscal buffers remains a priority for some countries with high debt levels. On the other hand, there are countries that have some scope to prioritise investments to boost their growth potential, while preserving the long-term sustainability of public finances. Ministers will feed this euro area perspective into their national budgetary preparations in the coming months. We will come back to the issue when we assess the draft budgetary plans for 2019 towards the end of this year.
We then discussed Spain and Ireland post-programme surveillance. We congratulated both Nadia (Calvińo) and Paschal (Donohoe) on the strong economic performance of their countries. We encouraged them to continue pursuing sound economic policies to safeguard the Spanish and Irish economies against downside external risks.
After the Eurogroup meeting today, the ministers met with different hats, as the ESM Board of governors, to shortly discuss Greece. The update of the Greek Memorandum of Understanding and the authorisation for disbursement of the last tranche of €15bn was ratified by 18 countries.
The final decision approving the formal closure of the review and providing green light for disbursement can be done as soon as all national procedures are completed. I expect this to happen in the beginning of August.
This was the last meeting among ministers under an ongoing Greek programme. It was an opportunity to bid farewell to this program and welcome the Commission’s plan, presented to us today, to enact the post programme surveillance starting mid-August.
Today we had a special meeting to discuss a letter sent by the Bulgarian authorities on prior commitments to join ERM II and Banking Union.
For that we welcomed in the room Denmark, as member of ERM II, and Bulgaria - represented by the finance ministers and central bank governors.
I am very glad to announce that the constructive discussions of the past few months on the roadmap towards Bulgaria's accession to ERM II have paid off and that we were able to come to a successful outcome today.
We welcome the commitments taken by the Bulgarian authorities in the areas of banking supervision, other financial sector issues and institutional quality and governance. They are highly relevant for a smooth entry and participation in ERM II. Our assumption is that Bulgaria will simultaneously join ERM II and the Banking Union and will take further commitments at that point in time which is standard practice in ERM II applications.
Bulgaria is committing to enter into close cooperation with the ECB. This follows already existing procedures. Other additional commitments put forward relate to other financial sector issues, as I said, and institutional quality and governance.
These series of commitments show Bulgaria’s determination to be part of the euro family. It also shows that the euro area is a solid anchor of stability and growth in Europe that continues to attract new members. This is not surprising. The euro today offers a more solid construct than before the crisis, namely with projects like Banking Union that reinforces our ties.
I should stress that we expect to follow a similar approach in the future for other Member States wishing to join ERM II and the Banking Union, in line with the principle of equal treatment.