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A key short-term challenge across Europe is to revive growth. Building on yesterday's
discussion, we decided today on a "Compact for Growth and Jobs". It will mobilise 120
billion euro for immediate investment, which will boost the financing of the economy and
help create jobs.
In the current situation, establishing a longer-term perspective for the euro area is a
pressing priority. Indeed, as has been pointed out: if we want investors to buy ten-year
bonds, understandably they would like to know where the Eurozone stands in ten years
time.
Yesterday we discussed the report on the future of the Economic and Monetary Union
that I presented earlier this week at the request of the Heads of State or Government,
prepared in close cooperation with the Presidents of the European Commission, the
Eurogroup and the European Central Bank. As you know, this report outlines an
architecture based on integrated frameworks for the financial sector, the fiscal matters and
the economic policy. Steps forwards in these three areas must be accompanied by
increased democratic legitimacy and accountability. These were and these are the four
building blocks.
Let me start with the financial sector: here, beyond general agreement on the longer term
view, we already achieved a hugely important first result. Last night, we agreed that, under
certain circumstancesand under certain conditions, the ESM could recapitalise banks directly.
The biggest and most important condition is setting up a single supervisory mechanism for
banks. The Eurozone leaders have asked the Council to work in a very speedy way so that
we can have results by the end of the year. This is a major breakthrough. It is a first step
also to break the vicious circle between banks and sovereigns and it is already a first result
of our common report. I said last week that the building block of banking integration is the
most important one, in the sense that we can achieve results in a short timeframe. A few
days after we presented our report, the idea of a European supervisory system for banks is
accepted.
On the second and third building blocks of the report: fiscal matters and economic policies,
we all share the same analysis. The Economic and Monetary Union can only function if
each and every country's budgetary and economic policies are sustainable: this is the
founding contract between countries sharing a common currency.
We also took another important decision yesterday night during our Eurozone discussion.
We agreed to open the possibilities for countries which are complying with common rules,
recommendations and timetables, to make use of the existing EFSF/ESM instruments to
reassure and stabilise the markets. Financial assistance to Spain will be provided without
seniority status for the financing provided by the EFSF/ESM.
The European Council agreed on a method to take forward our work on those four building
blocks. As President of the European Council, I have been invited to develop a specific and
time-bound road map, again in close cooperation with the Presidents of the Commission,
the Eurogroup and the Central Bank. Member States will be closely involved. There will also be consultations
with the European Parliament. We will present a final report beforethe end of the year, with already a first report in
October.