30 October 2011

Joint letter from Van Rompuy and Barroso to the G20 leaders

"Within the EU, we are taking all necessary steps to ensure the stability and growth of the euro area. The euro is at the core of our European project. On 26 October we agreed on a comprehensive set of measures to restore confidence and address the current tensions in financial markets. These measures include:

• a sustainable solution for Greece. Our agreement puts Greece on track to reach a public debt ratio of 120 per cent of GDP in 2020. The solution includes a voluntary agreement for a nominal discount of 50 per cent of Greek debt held by private investors. This will ease market pressure on Greece and allow the country to continue its programme of reforms. We aim at concluding work on a second financial assistance programme by the end of the year.
• A significant further strengthening of the resources of the European Financial Stability Facility (EFSF), which depending on the specific set-up is expected to leverage up to around €1 trillion. The subsequent ratification of the new European Stability Mechanism (ESM) Treaty will provide the euro area with a permanent instrument to support financial stability
• A coordinated plan to reinforce Europe's banking system. We approved a coordinated scheme to recapitalise banks across Europe and we are working to design an approach for medium- and long-term funding of banks. Banks will be required to temporarily increase the ratio of highest quality capital to 9 per cent after taking account of sovereign debt exposures. Supervisors will ensure that banks' plans for recapitalisation do not lead to excessive deleveraging or undue pressure on sovereign debt markets.
• Determined action to ensure sustainable public finances and enhance growth. Euro area Member States that are experiencing tensions in sovereign debt markets will make a particular effort in terms of fiscal consolidation and structural reforms, and we will accelerate our growth strategy, notably by using the full potential of our single market of 500 million citizens.
• Strengthening euro area governance. We agreed to put in place a set of concrete measures to strengthen economic and fiscal coordination and surveillance within the euro area, going above and beyond the recently adopted package on economic governance.

Full letter

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