Local view for "http://purl.org/linkedpolitics/eu/plenary/2009-12-15-Speech-2-299"
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"en.20091215.18.2-299"2
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"Mr President, Commissioner, thank you, Mr Verhofstadt, for tabling the question. However, the posing of the question during this evening’s debate may confuse European Union citizens in Western Europe. ‘Look, we have to suffer from the financial crisis too, because Eastern and Central Europe, through its clumsy governance, has created these problems for itself and also for us’. Such a view debases the already seriously impaired confidence in the European Union’s cohesion policy. The example of the Baltic States, however, shows that we are in the same boat. The pursuit by the Scandinavian banking sector of market share and high profits in practice squeezed national currencies in the Baltic States out of the loans market, particularly the home mortgage loans market. With a fixed national exchange rate, the civil liability of borrowers towards lenders was very high: all the currency risk in the value of an overpriced pledge was borne by borrowers.
In late 2008, in tense talks between the Latvian Government, the International Monetary Fund, the European Commission and the Swedish Government, a decision was taken to buy up the second largest commercial bank, using only Latvian taxpayers’ money, and to keep the national exchange rate strong. Thus, we Latvians, having over many years lost our revenue, competitiveness and, possibly, quality of society, saved the banking sector of the Scandinavians and other investors, at least in the Baltic States, since the domino effect in the event of banks failing would go far beyond Latvia’s borders and would reach as far, let us say, as Scandinavian pension funds, as the banks’ shareholders. Yes, the European Commission helped us, and the International Monetary Fund financed this choice, but the lion’s share of the loan goes to stabilise the banking sector.
By not allowing a default and by retaining a strong exchange rate, we devalued our economy by 20% of GDP, but in reality, we were helping the neighbouring Estonians, whose advantage, of course, was having had a responsible budget balance for many years, to introduce the euro as early as 2011. It appears even more odd that for Europe’s monetary union, an example like Estonia is even crucially necessary. This, as it were, shows that the Maastricht criteria for the introduction of the euro work even in times of crisis. It is not that we are not pleased for the Estonians, but our sacrifice, in buying the bank, was a certain measure of solidarity in not foisting off misfortune upon our neighbours and aggressive investors, too. We only wanted to see a certain solidarity from European financial policy makers, including on the subject of the barrier to new euro area states.
Politicians in Latvia had to take extremely harsh decisions, which the majority of my fellow Members in the older European countries would not have to deal with even in their most terrible nightmares. However, it is not within our power to take away the currency risk of private debt from our citizens, and we do not want to behave like hooligans by unilaterally introducing the euro or allowing the euro to circulate in tandem with our national currency. However, the goal of our demographically ageing society cannot be to spend many years exchanging every second lat earned into euros to pay back the banks, while in the evenings, offering up prayers that the lat will hold fast against the euro."@en1
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