15 September 2017

Remarks by Jeroen Dijsselbloem following the Eurogroup meeting

The Eurogroup President said he wasn't sure of talking about 'recovery' anymore since "confidence is ever increasing". EU leaders hold discussion on how to make the monetary union more resilient and on the state of play in Greece.

We started our first meeting after the summer break with a discussion  on how to make our monetary union more resilient, which is vital for its sound functioning. The discussion took place about what is the responsibility of member states and what is the responsibility of the monetary union or the European Union, and I think reducing vulnerability. There are 3 aspects regarding resilience. First of all, of course, how we can make sure that we are less vulnerable to economic shocks. Secondly, how we can increase the absorption capacity. So this is how when the economic shock occurs, how it is being dealt with, absorbed, by institutions, by markets, by households, by companies. And thirdly, about enabling a faster economic recovery after a shock. And that, of course, is one of the lessons learnt from the crisis. We were much too slow in absorbing the shocks. We weren't ready and fit to absorb the shocks, neither on the private nor on the public side, and it took a very long time to recover. Certainly, if you compare for example to how the US recovered from the crisis. So the three phases: reducing vulnerability before the shocks, absorption of the shock when it occurs, and having a fast recovery after the shock. Those were the elements discussed.

It is of course an umbrella issue, because when you get into it, it is again about the kind of structural reforms needed at national level, finishing the banking union, completing capital markets union so markets can absorb more shocks, improving our governance and institutional frameworks, both national and European. Many of those topics we will also return to today, tomorrow, in the coming months when we discuss the future of the monetary union. 

So we will build on today's discussion, bringing the topics back on our agenda in the coming weeks, putting it in the work programme of the Eurogroup, and start work this autumn on topics that are right in front of us, like finishing the banking union - the Commission already has proposals on the table -, doing more work on the capital markets union where proposals are on the table, while we discussed the future elements of the monetary union.

Second topic today was the state of play in Greece, the planning for the third review in Greece.

We got a report from the institutions on topics that are being worked on at the moment. Technical teams are at the moment in Athens, fact-finding and preparing the grounds, so that later on the third review can get off to a quick start. The idea is to finish that before the end of the year. More work needs to be done of course on a number of issues some of which were already mentioned today.

A sign that Greece has come a long way is the proposal to abrogate the excessive deficit procedure, which we welcomed today and is expected to be adopted by the Council later this month. [...]

Full remarks

Commissioner Moscovici's introductory remarks at the Eurogroup press conference

[...]Growth is back in Greece. As you said, the Commission has proposed closure of the EDP. This decision should be definitively adopted in the few weeks to come by the Council in its General Affairs formation.

Greece has made a first step, an important step to return to markets.

And the IMF has taken its decision in principle to support the programme. Now we must ensure that this positive trend and the confidence it feeds be sustainable, durable and reinforced. This is the message the Commission has passed to the Eurogroup.

The third review will take place this autumn. It will mostly be dedicated to implementation of important reforms which have been adopted these recent months. There will be challenges of course. It will require intense work. My wish is that this work is done in a calm climate with constructive approach from all parts. And we must also build a complete strategy to conclude the programme and agree what will happen after the conclusion of the programme.

It's in everybody's interest that this third review gives the signal – the powerful signal - which is the return of Greece to a situation which should be normal: full rights, full belonging and full support in the framework of the eurozone.

Of course, we share the concern expressed on the judicial cases in Greece. We fully respect the independence of the judicial system. But we see also that these cases create reputational damage and could, if no solution is found, damage the return of confidence among investors. So we, in full respect of the independence of the judicial system again, must find a solution.

Discussion on resilience in the euro area

I will also say a few words on the discussion we had this morning on “resilience” in the euro area.

The economic situation in Europe is improving, and that is good news for all of us. But there is still a lot to be done to improve the capacity of our economies to withstand new shocks, and to avoid causing again unnecessary economic and social pain for our citizens.

Resilience is important, because it is linked to convergence – they are the two faces of the same coin. It implies working to strengthen our financial sectors, our taxation systems, our product markets and our business environment, to name just a few areas.

More generally, we must pay attention to the quality of public finances, not only formal criteria or nominal deficits, the quality of public finances and especially spending reviews, but  including the efficiency of public spending and taxation too. This is particularly important at this juncture in order to recover the fiscal space necessary to absorb the next shock which will necessarily happen once. We cannot build our growth on new deficits. [...]

Finally, I would like to underline that there is obviously also a case to be made for action at the euro area and EU level to help foster more resilient economies.

For instance as laid out in our reflection paper on the future of EMU: the creation of a central stabilisation mechanism would help foster the resilience of the euro area by providing a buffer to absorb shocks and facilitate a swifter recovery. By the same token, the creation of a common safe asset - and we don't forget the proposal - would make the euro area more robust in times of stress. And of course I am looking forward to discussing these matters in the informal ECOFIN this afternoon. [...]

Full remarks

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