Main results - Eurogroup

21 June 2018

The Eurogroup agreed on the surveillance framework that will apply after the end of Greece's economic adjustment programme, the size of the final tranche of financial support by the ESM, debt measures, fiscal targets, further steps for deepening EMU and the completion of the banking union.

Greece's economic adjustment programme

The Eurogroup discussed the fourth (and the final) review of Greece's economic adjustment programme and agreed on the elements to support Greece's successful exit from the programme in August this year.

It adopted a statement outlining the agreement, which includes the surveillance framework that will apply after the programme, the size of the final tranche of financial support by the ESM, debt measures and fiscal targets.

Eurogroup statement on Greece

IMF Article IV consultation with the euro area

The Eurogroup exchanged views on the International Monetary Fund's (IMF) presentation of the outcome of its Article IV consultation with the euro area. The IMF is expected to publish the final report shortly.

This year, the consultation focused on national and European-level policies aimed at protecting the euro area economy from future shocks.

The IMF carries out such consultations every year with all of the IMF members, both individual countries and currency regions, including the euro area. This is done in accordance with Article IV of the IMF's Articles of Agreement.

Updated draft budgetary plan of Spain

The Eurogroup exchanged views and adopted a statement on Spain's updated draft budgetary plan for 2018.

Eurogroup Statement on the updated Draft Budgetary Plans of Spain for 2018

Cyprus: post-programme surveillance

The European Commission and the ECB informed the Eurogroup of the main findings of their fourth post-programme surveillance mission to Cyprus that took place between 19 and 23 March 2018.

The ESM presented the findings related to its early warning system; the IMF conducted its second post-programme monitoring mission at the same time.

The aim of the post-programme surveillance is to establish any possible risks to the country's ability to repay loans received under its earlier adjustment programme. The surveillance continues until at least 75 % of the loan has been repaid.

Preparation of the June Euro Summit: deepening of the Economic and Monetary Union (EMU)

The Eurogroup met in inclusive format to prepare the Euro Summit of 29 June 2018.

The discussion focused on the further steps for the banking union and the reform of the European Stability Mechanism. Ministers also touched upon fiscal issues, including proposals on a possible euro area fiscal capacity

Euro Summit, 29 June 2018

Remarks by M. Centeno following the Eurogroup meeting of 21 June 2018

[...]On Banking Union, efforts made in the past year to increase resilience and reduce risks are paying off. A fact-based report by the Single Resolution Board, European Commission and Single Supervisory Mechanism that I asked for in the last Eurogroup found that risks are receding in the banking sector in Europe. At the same time, we all acknowledge that continued work will be needed, in particular in further reducing the amount of bad loans in banks’ balance sheets.

We broadly support a gradual approach whereby risk reduction and risk sharing measures are taken in the appropriate sequence.

First, the Council agreement on the banking package and the indicators to measure progress with risk reduction allow for a decision on the ESM as backstop to the Single Resolution Fund. This means setting up a credible safety net for the banking sector. This is a very concrete step which will be implemented as part of a broader reform of the mechanism.

Second, after the European Council in June, the work on a roadmap for beginning political discussions on EDIS could start.

Finally, we agree to act decisively on the Anti-Money Laundering front. 

Moving on to crisis management, there is broad support to strengthen the role of the ESM. This would equip the euro area with better crisis resolution tools.

As I said earlier, we support entrusting the common backstop for bank resolution to the ESM. This will be part of a broader reform package. The backstop could become available before the end of the transitional period. That can happen if significant progress has been achieved in risk reduction. Its size would be aligned with the target level of the SRF. Effectively we support doubling our firepower for bank resolution. 

ESM reform however, does not end here.

First, on the role of the ESM, we agree that a reinforced ESM should take a stronger role in designing and monitoring programmes without duplicating the role of the Commission.

Second, on the ESM toolkit, we agree to review the existing instruments, in particular the precautionary tools, and assess the need for new instruments.

On debt sustainability issues, there are still a range of views in the room. 

Going forward, in terms of deliverables, the Eurogroup will prepare by the end of the year an outline of the key features of a strengthened ESM covering all the issues I have just mentioned. In a later stage, we could prepare the necessary changes to the ESM treaty and guidelines. 

Finally, it is clear that our discussions are less advanced on possible fiscal instruments for convergence and stabilisation in the EMU. Subject to guidance by leaders next week, possible avenues to be explored could be a euro area budget for competitiveness, convergence and stabilisation purposes. We could also examine a European unemployment insurance fund for cases of severe economic crises. 

Making a long story short: we have chosen to provide a credible safety net for the banks; we have set the right incentives for banks to continue deleveraging risks; we have decided to beef up the ESM to reinforce our lines of defence.

Full remarks


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