Local view for "http://purl.org/linkedpolitics/eu/plenary/2012-06-12-Speech-2-094-000"
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"en.20120612.5.2-094-000"2
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"Mr President, honourable Members, let me thank you for a very substantive and serious debate. I think that you share the sense of urgency and determination to pursue our joint strategy for sustainable growth and job creation.
These two draft regulations are indeed very important parts of that strategy in order to address macro-economic imbalances pre-emptively and in order to restore the sustainability of public finances, which is a necessary condition for sustainable growth and employment. Let me comment on two or three key policy issues in this debate.
First, with a view to the European Council in mid-June, we need to define the main steps towards full economic union. In that context, our guiding principle should be that, in order to move to further mutualisation, it is necessary in parallel to further strengthen our stability culture. That means, when talking about the prospect of a fiscal union, that more mutualisation of sovereign risk necessarily requires more fiscal integration before it can be acceptable to all. Moreover, more fiscal integration requires more pooling of fiscal sovereignty and that calls for a very profound debate on this issue.
One important avenue to strengthen economic and monetary union (EMU) is to construct a financial union as an essential element of a real and genuine EMU. The main building blocks towards a financial union could include at least larger banks of systemic importance for macro-financial stability in Europe and its regions. It will call for a solid EU euro area compact, including strengthened financial supervision at European level, a resolution authority at European euro area level and a single deposit guarantee scheme at European euro area level – all these in the same arrangement covering at least the euro area’s larger financial institutions.
The basic point here is the same as on the fiscal side: the sharing of risk in the guarantee scheme calls for substantially reinforced regulation and supervision at the relevant euro area or European level. In other words, any step in the further sharing of risk can only be taken on the condition that it is balanced by provisions to avoid free riding on the consolidation efforts of other Member States. This applies also to fiscal integration; for instance, the proposal of a debt redemption pact by the chairman of the Council of Economic Advisers is no different.
It is often referred to as a debt redemption fund but that is only part of it; it is a pact which has two sides. This debt redemption pact proposal would balance the suggested mutualisation of debt with very strict fiscal rules for the participating Member States for a very large number of years.
Why is that? In order to make it rational for all participants to agree to further risk sharing, enhanced economic surveillance must ensure fiscal prudence and minimise moral hazard, which again will require a very fundamental debate about pooling of fiscal sovereignty. This principle applies to the prospective construction of both financial and fiscal union.
Finally, I shall make some statements on Spain as well, as I find it is a very important subject at this critical juncture. Following the Euro Group’s positive response to Spain’s announcement that it is opting for support from the euro area for the restructuring of its financial sector, the Commission is ready to proceed swiftly with the necessary assessment on the ground, in close alliance with the European Central Bank, the European Banking Authority and the International Monetary Fund, and subsequently to propose appropriate conditionality for the financial sector in Spain. This means that system-wide and financial framework conditionality will include specific recommendations concerning financial sector supervision and regulatory requirements. In addition, bank-specific conditionality subject to State aid rules would be applied exclusively to the banks benefiting from the EFSF/ESM assistance.
With this thorough restructuring of the banking sector in Spain, together with the ongoing determined implementation of structural reforms and fiscal consolidation, Spain can gradually regain confidence and create the conditions for a return to sustainable growth and job creation. The only objective – and let me underline this – of this euro area decision, which the Commission supports, is to protect the savings of ordinary Spaniards and to enable credit flows to productive enterprises and ordinary households in Spain. This is indeed crucial for returning to recovery and for sustainable growth and job creation which, of course, is our ultimate objective. It is important also for the whole of Europe because this is also being done in order to safeguard financial stability in Europe as a whole."@en1
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