Barroso praised the Italian people for their determination to act, saying that the direction was right, but the way was long. He reiterated that a truly political union in Europe was needed.
In our meeting today, I am particularly interested to hear more from the Prime Minister on the state of play of Italy's reforms and the way ahead. We will also discuss our joint efforts at European level to stabilise the situation and get the economy growing again. And last but not least we will also exchange views on the perspective of a more integrated union we both believe Europe - and the world! - need.
I just want to highlight that we are now working on the implementation of what was agreed in the last European Council. As you know a document prepared by the President of the European Council, by myself, the President of the European Central Bank and the President of the Eurogroup was endorsed and now we are examining how best to move along this path. And we are preparing the next steps with the vision for the future of the EU, namely the euro area, but also with proper sequencing of the different steps.
Of course the logic of integration cannot be only economic. Banking union requires a single European supervisor for the euro area. Further economic union, too, requires supervision of the Member States' economic policies, joint supervision. It is therefore logical but also right and just that there is further political or institutional integration as well.
This integration is needed also to ensure democratic oversight of the process and to reassure the European citizens that they are part of the process. With more integration comes more democracy, more accountability and we should not be afraid of the words: we need to consolidate a truly political union in Europe. So deepening economic integration and especially this political union requires a long term vision. But at the same time we have this horizon we should now take the immediate measures, and among them are the steps for banking union in the euro area.
And we are going to present on the 12th this month our proposal for a single supervisor on the euro area; this is essential part of the so called banking union: the integrated financial framework for the euro area. The link between sovereign debt and bank debt has to be broken once and for all. We must end this vicious circle when rescuing banks weakens the governments' budgets while increasing risk-averse banks stop lending to businesses and that can undermine the economy further.
A single rule book for financial services being put in place for the single market and with our proposal for the 12th September we will build this single banking supervisory mechanism around the ECB that will create the conditions for this banking union to be consolidated. The single banking supervisory mechanism does not require a Treaty change and should be in place by January 2013. So this is our way forward in terms of stability: completing the institutional framework in the Euro area, at the same time the governments are making the necessary structural reforms to ensure this kind of stability.
But as we have said we need stability and growth. Growth is also part of the solution for the complex problems we have today in Europe. And that is why we believe that some targeted investment is necessary to restore possibilities of growth in Europe. That is why we are grateful for the support the Italian government is giving to ambitious Multi-annual Framework, Budget for the next seven years because we believe that we have to combine the effort at national level with the proper efforts at European level."
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