Mr Lipsky also presented the following key points:

• The crisis has brought the euro area to a crossroads—and the management of the ongoing sovereign debt problems in several countries is a key element in this. Clearly, only a cohesive and cooperative approach to crisis management will be successful. This means that the determined commitment to reforms and adjustment in the programme countries must continue--including immediate and far-reaching structural reforms, privatisation, and the opening of markets to foreign ownership and competition. A cooperative approach also requires continued euro area financial support under the right conditions to allow and foster success: a scaled up but also a more flexible EFSF will be important; and it is essential to bring the debate about debt re-structuring and the set up of the ESM quickly to a close.

• Turning to the financial sector, the agenda has been clear for a while. But it is important now to push further ahead with implementation. It is imperative that the ongoing bank stress tests lead to a fundamental strengthening of the capital positions of euro area banks. Market-based solutions to add capital should dominate. For example: why not foster cross-border takeovers? Why not focus on the development of corporate bond markets and re-establish high quality securitisation--to support firms while banks adapt to the new regulatory environment?

• The path to more growth is through more economic integration. The recovery is broadly sound, even though growth remains uneven and moderate overall. Low growth aggravates banking problems, makes the necessary fiscal consolidation more difficult, and does little to reduce the still high unemployment in much of the region. Policymakers have focused on national priorities, but the solution for growth is completing the single market. Labour and equity capital have to flow freely across borders to wherever they are needed most to unleash Europe's growth potential and create new jobs. Opening capital markets, not only for banks, is particularly important in this respect. To use a catchphrase: well-working markets have no need for “national champions”.

• But the single market cannot blossom without stronger common rules and more intrusive governance. Briefly, the euro area needs:

- A more integrated financial stability framework. Strong common rules for regulation and supervision are crucial. These rules should have sufficient flexibility to deal with macro-prudential risks, coordinated by the European Systemic Risk Board (ESRB). There has been a lot of progress here, but still more needs to be done to strengthen joint crisis management and resolution with a common backstop financed by the financial industry to protect taxpayers.

- To continue to strengthen its economic governance. To make a difference, rules will have to be more intrusive and do a better job shaping national policies. This means more automatic rules, implemented within tighter deadlines, and a greater say for the Commission in handling the Stability and Growth pact (SGP), the Excessive Deficit Procedure (EDP) and the new Excessive Imbalances Procedure.

Press release