The interim report sought to clarify concepts and test the level of support for various ideas that have arisen, with the aim to reach conclusions in December. It highlighted points of convergence and outlined areas that would require further work. The European Council gave a mandate to continue this work and propose a specific and timebound roadmap to be presented at its December meeting so that it can move ahead on all the essential building blocks on which a genuine EMU should be based.
Our immediate priority was progress on financial integration. In June, we agreed to break the vicious circle between banks and sovereigns. The urgent element now is setting up a Single Supervisory Mechanism (SSM), to prevent banking risks and cross-border contagion from emerging. That's why the European Council called for swift progress, with the objective of agreeing on the legislative framework by 1 January, 2013. Once this is agreed, the SSM could become effectively operational during 2013. This places a huge responsibility on all of us to meet this ambitious timeline. We cannot afford the risk of losing momentum.
When establishing a Supervisor, several aspects need taking into consideration:
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There must be a clear separation between the monetary responsibilities of the ECB and its supervision functions.
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The ECB should be able to carry out supervision directly in a differentiated manner, meaning: using national authorities in supervisory tasks as much as possible.
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The SSM will be designed and implemented with the integrity of the Single Market for financial services in mind.
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And finally, the mechanism should be inclusive and transparent: all Member States are free and invited to join. This openness should be reflected in the governance structure, with appropriate rights and obligations for all.
The SSM is a first, essential step toward a complete, integrated framework for the financial sector. Other steps also need to be taken quickly, starting with harmonising national resolution and deposit guarantee schemes, following which the Commission will propose a single resolution mechanism.
As agreed in June, direct recapitalisation by the European Stability Mechanism will be possible once an effective SSM has been established. We asked the Eurogroup to draw up the exact operational criteria.
For a stable Economic and Monetary Union we also need stronger integrated frameworks for budgetary matters and economic policies. On both these fronts we have already done a lot. Let me put it this way: if we fully use all our tools: the six-pack, the forthcoming two-pack, the European Semester with its Country Specific Recommendations, the new Macro-economic Imbalance Procedure and the Treaty on Stability Coordination and Governance…. then we will have already taken a major step towards fiscal and economic union! Yet to secure the eurozone’s long-term stability, we also need to be able to better deal with economic shocks, and spur economic convergence.
Here, some new avenues in my report attracted attention. I received a mandate, together with my colleagues, to explore them further between now and December. One of these is that Member States could enter into individual arrangements of a contractual nature with the EU institutions on the reforms they commit to make, in response to the Country Specific Recommendations of the Council, to promote growth and jobs.
Another is the possibility of an appropriate fiscal capacity for the euro area. This new idea requires further exploration and it was agreed that this is, and I emphasise, unrelated to the preparation of the next Multiannual Financial Framework.
It will be crucial for the new EMU to be fully legitimate and accountable. As a general principle, we all agree that democratic control should occur at the level where decisions are taken. It's also important to build this deeper EMU on the EU's institutional and legal frameworks, and to make sure that it remains open and transparent towards Member States outside the eurozone.
To conclude: this was a positive summit. It is good for Europe that we will have a Single Supervisory Mechanism up and running in the course of 2013. Between now and December we will work on further progress to reinforce our Economic and Monetary Union. The biggest contribution to growth on the short term is restoring confidence in the
eurozone.
© European Parliament
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