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25 March 2010

Barroso at EP plenary session: financial stability and Greek situation not on EC’s formal agenda


The EC believes it is now appropriate to create, within the euro area, an instrument for coordinated action which could be used to provide assistance to Greece in case of need. It should be clear that the creation of such a mechanism would not imply its automatic activation.

Financial stability and the situation in Greece are not on the EC’s formal agenda. Barroso cannot see how it is possible for government and state heads, notably those in the Euro area, to decline to discuss this issue.
EC position on this:
·         Greece is currently in the process of correcting its government excessive deficit. Bringing the deficit down vigorously is crucial and Greece has been taken measures to produce that result.
·         In particular, Greece is taking measures intended to lead to a reduction in its deficit this year by 4 per cent of GDP. Such fiscal effort is in line with the course of action recommended by the Commission and the Council, as acknowledged by the Council on 16 March.
·         Naturally, Greece's fiscal effort must be continued; it is the only way to secure a lasting reduction in the cost of debt financing.
·         In response to the economic and financial situation in Greece, the informal meeting of the government and state heads on 11 February stated that, and I quote, "Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole".
·         The Commission believes it is now appropriate to create, within the euro area, an instrument for coordinated action which could be used to provide assistance to Greece in case of need. It should be clear that the creation of such a mechanism would not imply its automatic activation. Creating such a mechanism is also a question of responsibility and solidarity. Solidarity is a two-way street. Greece is making an economic effort at this point and by supporting these efforts we not only help Greece, but also the stability of the Eurozone as a whole.
·         The framework for coordinated action should be understood as a safety-net to be used only in cases when all other means of avoiding a crisis have been exhausted, including first and foremost exhausting the scope for policy action at the domestic level.
·         Beyond technical aspects, any possible solution must reinforce and strengthen the unity and the coherence of the Eurozone and its governance. The world economy needs stability. The Eurozone is a pole of stability, and it is important that its capacity to provide stability is further enhanced. We may need to resort to inter-governmental instruments for some issues, but they need to be embedded into a joint European framework.
 


© European Commission


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