07 November 2013

Commissioner Barnier: Restoring confidence in the EU

Speaking at the EPC Annual Conference, Barnier said that three of Europe's 'failures' were being addressed - the lack of financial regulation; the level of public debt; poor economic governance - but more competitive economies were needed, also at global level.

I - The first key to restoring confidence is to address the problems in the financial system

This is where the crisis started in the first place. Let’s not have short memories. To trust the system again, people need to know that it is regulated. To make sure that every actor - including hedge funds; every financial market; and every product including OTC derivatives; are regulated in a robust and transparent way.

For nearly four years now, our regulation agenda has had one overriding goal: People also need to know that banks are strong enough to resist shocks. We demand from banks to hold more and better capital, while strengthening their risk governance and reigning in the excesses of the past...

When the ECB becomes fully responsible one year from now, the banking system of the euro area will have completed its restructuring process – started five years ago. I recognise that Europe has been slow, but that is because “democracy” time is necessarily longer than “market” time. It is also because of the way it has approached the necessary restructuring. We will only manage to complete the process by being in our approach.

Better supervision can only work if proper resolution rules and processes are in place. It is essential that the Bank Recovery and Resolution Directive is adopted before the end of this year. And it is essential as well that by the end of this parliamentary term we complete the negotiations establishing a single resolution authority. And a single resolution fund in the euro area.

Putting these structures in place is absolutely imperative if we are to succeed in restoring confidence. They break the link between banks and sovereigns. To avoid using taxpayers’ money to prop up failing banks. And to return banks to their rightful role in funding the rest of the economy.

II - We also need to restore confidence in the economic governance of the euro area

This year, for the first time, we launched a new system for coordinating budgetary policies. All euro area Member States presented their draft budgets for 2014 to the Commission and to the Eurogroup. This month, the Commission is assessing these draft budgets. To see whether the proposed measures are in line with the European fiscal rules and the relevant Council recommendations. Looking in particular at their impact on public debt.

And let’s be clear, it wasn't "Brussels" that created a level of public debt that is 93 per cent of GDP on average in the euro area. But "Brussels" is trying to encourage Member States to return to more responsible behaviour. It is not sustainable to borrow from our children for our living allowances today.

The purpose of all this is not to force euro area countries to sacrifice economic sovereignty. The Commission is not dictating national economic policy. It is about increasing transparency. Showing that everyone is playing their part. Fulfilling their obligations. So that we can restore confidence between peers. This crisis has shown that the problems of some very quickly become the problems of all the others.

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VI – To conclude

We sometimes get so caught up in addressing what is wrong with Europe that we forget to underline what we do well. Despite all our problems, European countries and cities score year after year at the top of global “quality of life” surveys. We have managed to create advanced market economies without losing the solidarity that holds our societies together. We still have a strong social fabric, with families and communities at its heart.

I strongly believe that we will not have sustainable economic performance without social cohesion...

A majority of EU citizens believe that they are better off in the EU. When asked if their individual countries would be better placed to face the future if they were outside the EU, 56 per cent of people did not agree. This is what we need to build on. These are the messages we need to get across.

We all know that ‘anti-everything’ political forces are growing. And that they will be doing their best to paint a picture of themselves as being the answer to ordinary voters’ concerns before next May’s European elections. While the emergence of these parties is understandable, each of us in this room has a responsibility to alleviate the anger that these parties feed on. To de-bunk many of the false claims they make. And to expose their ‘easy answers’ as populist lies.

And we need to communicate a hopeful message. About how much the EU has done to help its people and businesses recover from the crisis. How we are pulling together. To make the most of the advantages we have. To change what needs to be changed here in Brussels. And that way, take the path towards a much brighter future.

Full speech

© European Commission