EC President Van Rompuy to the European Parliament: Summit agreements are important steps in the right direction

03 July 2012

Mr Van Rompuy described the summit as "another step on the long road to overcome the financial and economic crisis and to correct the structural flaws of the euro area framework".

A €10 billion increase of the capital of the European Investment Bank will increase the Bank's overall lending capacity by €60 billion. The other €60 billion comes, first, from the structural funds which will be devoted to growth-enhancing measures in the current period (€55 billion) and, second, from the pilot phase of Project Bonds that will be launched this summer and will go to key initiatives such as energy, transport and broadband infrastructure (almost €5 billion).

The "Compact for Growth" is not just about injecting money: it contains a number of elements. Work to be done by the Member States individually, who have already undertaken a number of commitments in that respect. And work to be done together as a Union, including deepening the single market, negotiating good trade agreements, working together on tax matters, and strengthening the European research area.

Several Member States will launch a request for enhanced cooperation regarding a Financial Transaction Tax with a view to its adoption by December 2012. As I have said before, the European Council has not suddenly discovered the virtues of economic growth. Re-launching growth and creating jobs has been a constant concern, from the very first meeting under my presidency in February 2010 right up until now. I am happy this European Council has been able to give it a real push.

The growth and jobs agenda requires a structural approach, but also short-term actions for financial stability. A return of confidence for consumers and investors will itself lead to more demand and growth.

Second main point: as eurozone leaders, we reaffirmed our strong commitment to do what is necessary to ensure the financial stability of the euro area. In particular, we affirmed that it is imperative to break the vicious circle between banks and sovereigns, and we reached a number of important agreements to this effect among the eurozone 17.

We urged the rapid conclusion of the Memorandum of Understanding attached to the financial support to Spain for recapitalisation of its banking sector. We agreed that the financial assistance to Spain will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status. The Commission will shortly present proposals for a single supervisory mechanism for the financial sector, on the basis of Article 127(6) -- so involving the European Central Bank. We ask the Council and the Parliament to consider these proposals as a matter of urgency, before the end of the year. When an effective single supervisory mechanism is established, involving the ECB, the ESM could, for banks in the euro area and following a regular decision, have the possibility to recapitalise banks directly, under certain conditions and in certain circumstances. The perspective is clearly to avoid that this recapitalisation impacts upon public debt. This single supervisory mechanism was a key proposal in our recent report "Toward a genuine Economic and Monetary Union". It is a breakthrough. It also shows a clear link between the longer-term measures we are proposing and the short term actions we are taking.

Full speech

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