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The current crisis has exposed both fiscal and macro-economic imbalances caused by a lack of reforms in several eurozone countries as well as structural problems in the institutional set-up of Europe’s economic and monetary union. But in the eye of the storm, we strengthened the foundations of our currency and improved the sustainability of our economies. Not everything is in its right place yet, and the necessary adjustment is bringing serious social challenges, notably in the form of unacceptably high unemployment. These challenges have to be addressed with determination. Yet the evidence is clear that our response to the crisis is supporting the rebalancing of the eurozone economy and has ensured the integrity of the euro...
Our task is far from being complete. Europe is working towards a banking union to further strengthen eurozone bank supervision and provide genuinely integrated tools for crisis resolution. The ECB has been entrusted with the responsibility for bank supervision. This single supervisory mechanism will significantly contribute to safeguarding financial stability in the monetary union, thereby reinforcing confidence. Further work will provide a single mechanism to unwind failing banks, funded by levies on the sector itself, and in parallel, rules for direct bank recapitalisation by the ESM.
This response to the crisis has delivered results. Countries under assistance are improving their fiscal situation and regaining competitiveness. Markets are rewarding this effort. Both Ireland and Portugal are on track to sustainably regain market access within the next twelve months. The Commission estimates that, by the end of this year, the eurozone as a whole will have an overall budget deficit below 3 per cent of GDP. Smaller deficits mean less debt and more scope to invest for growth.
With this approach, the eurozone has shown a degree of resilience and problem-solving capacity that many observers and policy-makers would not have predicted even a year ago. Europe has responded to adversity by moving closer together and deepening integration. As a result of our determination and our common strategy, a difficult but necessary adjustment is taking place – from which a stronger eurozone is set to emerge.