17 December 2012

Speech by President Barroso to the EP Conference of Presidents on the outcome of the European Council meeting of 13-14 December 2012

The single supervisory mechanism is an indispensable foundation stone of the banking union... It also brings closer the possibility of direct recapitalisation of banks by the ESM. The European Council reaffirmed that it is imperative to break the vicious circle between banks and sovereigns. It agreed that further to the June 2012 euro area Summit statement and the October 2012 European Council conclusions, an operational framework should be agreed as soon as possible in the first semester of 2013, so that when an effective single supervisory mechanism is established, the European Stability Mechanism will, following a regular decision, have the possibility to recapitalise banks directly.

It is now important to secure the rapid conclusion of negotiations on the bank capital rules and the harmonisation of national bank resolution and deposit guarantee schemes. These proposals are at the core of the single rule book for banking – the common substantive rules that the single supervisory mechanism as well as national supervisors will apply. I urge all actors to work for agreement on these proposals as soon as possible.

I have announced to the European Council that the Commission will then come forward with a proposal for a single resolution mechanism for banks. The Heads of State and Government agreed that this proposal "would be to be examined by the co-legislators as a matter of priority with the intention of adopting it during the current parliamentary cycle".

This is the logical next step – and it is a particularly important step on the road to creating a more sustainable and fairer banking system: a single resolution mechanism will make the banking system more resilient and at the same time protect taxpayers better from the consequences of banks in difficulty.

The issues at stake in the fields of fiscal union, of economic policy coordination and of commensurate political union are fundamental. They touch the heart of national policies and politics, indeed the heart of national sovereignty. That is why, as I said to this house last week, I did not expect any immediate decisions on the long-term vision. The discussions at the European Council revealed the complexity of the issues at stake. The sense of urgency is not the same in all capitals and more work is needed to create a consensus and a way forward.

This being said, the European Council identified the adoption of the "two pack" as the immediate priority and noted the Commission's intention to come up with a proposal for the ex-ante coordination of major economic reforms in the context of the European Semester.

The Commission's suggestion of a Convergence and Competitiveness Instrument was the subject of much interest, questions and lively discussion among leaders, just as it was in the last week's plenary debate in the European Parliament. President Van Rompuy and I were asked to present possible measures and a time-bound roadmap to the June European Council on the feasibility and modalities of these contracts and a solidarity mechanism to support them.

As I said last week, at the core of the design of our idea is the principle that discipline must be coupled with solidarity. And that new instruments like such an instrument must fit within the EU treaty and institutional architecture and the EU budgetary architecture.

Our approach is for an improvement of the existing procedures rather than for another layer of economic governance: namely, specific support to specific challenges identified within these procedures. One could call it a "stress mitigator" that should help Member States to tackle particularly demanding reforms or adjusting imbalances. This instrument can be a crucial tool in dealing with the fundamental issue of competitiveness and can be seen as a further contribution to our agenda for growth. They are instruments for competitiveness and growth.

I would also like to highlight the fact that the European Council acknowledged the importance of the social dimension of EMU including social dialogue. As you know the European Commission, while focusing the blueprint on the institutional architecture of EMU, has always insisted on the importance of using all elements of EU policies to complement actions at the national level to address fundamental issues of equity and social cohesion in the Union.

The need to ensure democratic legitimacy and accountability while making progress on EMU was acknowledged in the four Presidents' report and the blueprint. I am happy that the European Council has clearly stated that "Further integration of policy making and greater pooling of competences must be accompanied by a commensurate involvement of the European Parliament"...

I am confident that with the necessary hard work and sense of urgency Europe can overcome its current difficulties. The Commission stands ready to deliver the proposals we have announced and we are prepared to hit the ground running in 2013.

Full speech

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